The Federal Reserve announced its widely expected decision to leave interest rates unchanged on Wednesday, although the central bank’s forecasts suggests rate cuts are still likely later this year.
In support of its dual goals of maximum employment and inflation at a rate of 2 percent over the longer run, the Fed said it once again decided to maintain the target range for the federal funds rate at 5.25 to 5.50 percent.
The target range for the federal funds rate has remained unchanged since the Fed raised rates by a quarter point last July.
The Fed’s accompanying statement acknowledged inflation has eased over the past year but reiterated officials do not expect it will be appropriate to lower rates until they have gained “greater confidence” inflation is moving sustainably toward 2 percent.
Along with announcing the interest rate decision, Fed officials also provided updated projections for the economy and interest rates.
The latest projections suggest Fed officials expect rates to be lowered to a range of 4.50 to 4.75 percent by the end of 2024.
The interest rate forecast is unchanged from December and points to three quarter point rate cuts over the next nine months.
At the same time, Fed officials raised their forecast for rates at the end of 2025 to a range of 3.75 to 4.0 percent from the range of 3.50 to 3.75 percent forecast in December.
Fed officials also increased their forecast for GDP growth in 2024 to 2.1 percent from 1.4 percent in December, while the forecast for core consumer price growth was raised to 2.6 percent from 2.4 percent.
The Fed’s next monetary policy meeting is scheduled for April 30-May 1, with CME Group’s FedWatch Tool currently indicating a 91.2 percent chance the central bank will continue to leave rates unchanged.
Copyright © 2024, RTTNews.com, Inc. All Rights Reserved.
