Bureau of Labor Statistics (BLS) reports and Federal Reserve economic projections

Fed Holds Rates Steady at 5.25%-5.50%, Signals Only One Cut in 2024

Jun 12, 2024, 06:04 PM

The Federal Reserve has decided to keep interest rates unchanged in the range of 5.25% to 5.50%, marking the seventh consecutive meeting without a rate change. This keeps rates at a 23-year high. The decision comes amid ongoing efforts to combat inflation, which has shown modest further progress towards the Fed's 2% target. The Fed's latest economic projections indicate a more conservative approach to rate cuts in 2024, with only one 25 basis point cut expected, down from the previously anticipated three cuts. Additionally, the Fed forecasts 100 basis points of rate cuts in 2025. The updated projections also show slight increases in inflation expectations, with the 2024 PCE inflation forecast rising to 2.6% from 2.4% and core PCE inflation to 2.8% from 2.6%. The Fed's median view for the federal funds rate at the end of 2024 is now 5.1%, up from the previous 4.6%, and 4.1% at the end of 2025, up from 3.9%. The Fed also maintains its GDP growth forecast for 2024 at 2.1% and unemployment rate at 4.0%.