In its Federal Open Market Committee meeting Wednesday, the Federal Reserve chose to maintain its current key interest rate and implied that it will cut rates just once this year.
In March of this year, it was expected that there would be three interest rate cuts before the end of 2024. Now, following the policymakers’ two-day meeting, they’ve taken two cuts off the table. New reports suggested slight optimism that inflation can cool to the Fed’s 2% goal.
“Inflation has eased over the past year but remains elevated,” the post-meeting statement said. “In recent months, there has been modest further progress toward the Committee’s 2% inflation objective.” The second half of the statement reverses the committee’s last position, which was that there had been a “lack of further progress” on inflation.
The Fed committee now expects five interest rates cuts, equaling 1.25 percentage points, through the end of 2025. If the forecast holds, the federal funds rate benchmark would be at 5.1% at the end of next year.
