In its March policy decision, Federal Reserve officials are keeping interest rates steady at 5.3%, where they have been since last July. However, they continue to indicate that cuts will come later in the year.
The policymakers also released new quarterly economic estimates with an unchanged that borrowing costs will end the year at 4.6%. This lack of movement suggests they still expect three quarter-point rate cuts in 2024.
The Federal Reserve needs to balance cooling inflation with overdoing the rate cuts and causing a recession. “The risks are really two-sided here: We’re in a situation where if we ease too much or too soon, we could see inflation come back,” said Fed Chair Jerome H. Powell. “If we ease too late, we could do unnecessary harm to employment.”
Although Powell didn’t give any hint of when rate cuts were coming, many economists expect to see some movement around June. Additional cuts could come around in the fall near November’s presidential election, which could open the central bank up to accusations of being overly political when lowering borrowing costs.
