The Fed Holds Rates Steady and Predicts Just One Reduction This Year
How many times did the Federal Reserve predict they would cut borrowing costs before the end of 2024?
The Federal Reserve predicted that they would cut borrowing costs just once before the end of 2024. This is a sign that they plan to be patient before turning a corner in their fight against rapid inflation.
How has inflation trended throughout 2023, and what were the expectations of Fed officials entering 2024?
In 2023, inflation showed a steady slowing trend, which led Federal Reserve officials to enter 2024 expecting to cut interest rates three times. However, at the start of the year, price increases proved to be more stubborn than anticipated, causing the Fed to push back their plans for rate cuts. In light of new data released in June 2024, it appears that the early 2024 inflation stickiness was a temporary speed bump rather than a change in the trend, with price increases cooling notably in May.
What was the peak interest rate reached by mid-2023, and how does this compare to historical rates?
The peak interest rate reached by mid-2023 was 5.3 percent, which is a more than two-decade high. This means that it is the highest interest rate seen in over 20 years.