The Federal Reserve maintained its projection to carry out three interest-rate cuts by the end of 2024, according to the U.S. central bank’s Summary of Economic Projections released Wednesday. Still, as they continue to wait for greater confidence on inflation before easing, Fed officials dialed back the scope of cuts in 2025.
The December SEP marked the first sign that the Fed was gearing up to start easing monetary policy. But, after a string of sticky inflation readings this year, that dovish pivot might have been premature, market participants have suggested. Chair Jerome Powell emphasized in congressional testimony earlier this month that the Fed has made good progress towards its 2% goal, though “just a bit more evidence is needed before implementing the first rate cut.”
The rate projection comes from the Fed’s so-called dot plot, a closely scrutinized scatter chart of expectations on the path for interest rates, through which each of the 19 members of the policy-setting Federal Open Market Committee assign a dot for what they reckon is the midpoint of the federal funds rate’s range at the end of each of the next three years and over the longer term.
March’s median projections signaled the benchmark lending rate will retreat to 4.6% in 2024 from 5.4% in 2023 (same as December SEP), though the median forecast for 2025 rose to 3.9% from 3.6%. Policymakers also raised their long-term median estimate to 2.6% from 2.5%, implying rate will have to stay higher for longer.
At 2:30 p.m. ET, Fed Chair Jerome Powell will discuss the central bank’s rate decision and economic outlook during his post-meeting press conference.
This is a developing story. Check back for updates.