Inflation fell again in September, strengthening the case for another interest rate cut.

Inflation readings fell again in September, raising expectations of another interest rate cut at the Federal Reserve’s meeting next week.

The Fed’s preferred inflation gauge rose 2.1% annually in September, as expected. Prices rose 0.2% from the previous month, according to the personal consumption expenditure index released Thursday by the U.S. Commerce Department.

Core inflation, which excludes food and energy, reached 2.7% annually. While headline inflation continues to decline, core inflation has remained stubbornly at or near 2.7% all summer. Housing and health care costs continue to be the largest contributors to price increases.

The latest inflation data, along with continued signs of a cooling labor market, has most experts predicting the Fed will cut interest rates by a quarter of a percent at its meeting next week.

The Fed surprised some in September when it voted to cut the federal funds rate by half a percentage point instead of the expected quarter percentage point. The Federal Open Market Committee cut the federal funds rate from 4.75% to 5% after holding interest rates at record highs for more than a year in an attempt to reduce rising inflation to 2%.

With inflation approaching its target, the Fed has now shifted its focus to stimulating a weakening labor market. Lower interest rates can encourage businesses to borrow more money, which they can then invest in hiring and expansion.

So what do the latest inflation figures mean for your finances for the rest of 2024 and beyond?

Why does inflation matter?

Inflation measures how much the prices of goods and services rise. Inflation is not necessarily bad. If demand causes prices to rise, inflation can be a sign that the economy is growing and that consumers are confident enough to spend. However, when inflation exceeds wages, as has happened during the pandemic, your purchasing power is reduced—essentially, you can’t buy as much for the same amount of money.

The Fed began raising interest rates in early 2022 to try to bring inflation back under control. After its September meeting, the Fed said it had “great confidence” that inflation was on a steady path toward its 2% target.

However, even if prices are not rising as quickly, they are still high for most of us. A CNET survey found that most people are making sacrifices this holiday season to control their spending.

Pro tip: If you’re struggling to break out of the paycheck-to-paycheck cycle, check out these expert tips.

When will we get relief from high interest rates?

While this was the biggest interest rate cut since 2008, the Fed still only cut the federal funds rate by half a percentage point, which doesn’t really change interest rates for most people. To see any real relief, we’ll need several more rate cuts and time for them to take effect, experts say.

A quarter-percent cut is expected at next week’s meeting and into December, with further cuts likely in 2025. If all goes according to plan, we could see long-term declines in mortgage rates and credit card APRs in 2025, experts predict.

However, your interest rates on savings products like CDs and high-yield savings accounts also fall when the Fed cuts rates. Many rates have already begun to decline, but you still have time to maximize your earnings.