The Fed probably won't cut interest rates just yet — but its next move is expected to be good for Americans

• The Federal Reserve is making its next interest rate decision this week.
• It's expected to pause interest rate hikes.

The year is coming to a close, and it looks like the Federal Reserve's war against inflation is finally easing up.

On Wednesday, the Federal Open Market Committee is expected to announce its next interest rate decision, and a hike probably isn't in the cards. The CME FedWatch Tool, which analyzes various derivatives prices to estimate probabilities for interest rate changes, predicted a 98% chance the Fed will continue to pause rate hikes, with a 2% chance it'll cut rates, as of Monday afternoon.

In September, the Fed paused interest rate hikes as it continued to receive promising data on the country's economic recovery. Since then, the good news has continued — the US added 336,000 jobs in September, and the Consumer Price Index, which measures inflation, grew 3.7% year-over-year in the same month, holding steady from August and well below its high point last year.

Nick Bunker, economic research director for North America at the Indeed Hiring Lab, told Insider earlier in October that it appears the Fed is "less convinced that the labor market needs to significantly deteriorate for inflation to get under control."

The Fed's September economic projections showed the median FOMC member expects a 4.1% unemployment rate in 2024 and 2025, down from 4.5% in the committee's previous projections from June.

"Maybe they are more of the view that the labor market can moderate and be an ally in the fight against inflation," Bunker said, adding that that was evident in the jobs report released in October.

Bunker pointed to September's low unemployment rate of 3.8% and moderating wage growth.

Fed Chair Jerome Powell said during the September press conference that as the central bank continues its mission of reaching its 2% inflation target, "we're fairly close to where we need to get."

"We need to get to a place where we're confident that we have a stance that will bring inflation down to 2% over time," Powell said. "That's what we need to get to, and we've been moving toward it. As we've gotten closer to it, we've slowed the pace at which we've moved. I think that was appropriate. And now that we're getting closer, we have the ability to proceed carefully."

While the economic data continues to reflect significant pandemic recovery, Americans still feel a strain on their wallets. Federal student-loan payments officially resumed in October after an over three-year pause, meaning millions of borrowers now have less money to put back into the economy. On top of that, the New York Federal Reserve's quarterly report on household debt released in August found credit card debt reached a record-high of $1 trillion.

Powell has not indicated whether a interest rate cut will come this year to get consumers further relief. However, Greg McBride, chief financial analyst at Bankrate, said in a Monday statement that "even if the Fed proves to be done raising interest rates, we're still a long way from them beginning to cut rates."

"For borrowers, interest rates staying higher for a longer period underscores the urgency to pay down and pay off costly credit card debt and home equity lines," McBride said.

Even if interest rate cuts are not on the horizon anytime soon, administration officials are confident Americans will not face a recession as they enter 2024. Following the Bureau of Economic Analysis report last week that found gross domestic product rose at an annualized rate of 4.9% in the third quarter, Treasury Secretary Janet Yellen said at a Bloomberg event that "you don't really see any sign of recession here."

"What we have looks like a soft landing with very good outcomes for the US economy," she said.

Joelle Gamble, deputy director of the White House National Economic Council, told Insider in an interview after the recent GDP report that "all the data is pointing towards an economy that is growing steadily."

Gamble pointed out robust growth in recent GDP reports, "more and more people entering the labor market," and cooling inflation.

But with the ongoing wars in Israel and Ukraine, along with a possible government shutdown next month, uncertainty with the economy's progress remains.