The Fed Holds Rates Steady and Predicts Just One Reduction This Year
How does this new prediction compare to the projections made by the Fed officials in March?
In March, Fed officials projected that they would cut interest rates three times this year. However, in their June meeting, they revised their projections and now expect to lower rates just once before the end of 2024. This shift to a single rate cut is a more drastic change than economists had anticipated, indicating a cautious approach from the Federal Reserve as they try to avoid declaring a premature victory over inflation.
What were the initial expectations of investors regarding the Federal Reserve's interest rate cuts for this year?
Investors initially expected the Federal Reserve to cut interest rates three times this year. This expectation was based on the quarterly economic estimates released by Fed officials in March, which anticipated cutting interest rates three times in 2024. However, the Fed's projections for how interest rates may evolve surprised many economists as they predicted that they will cut borrowing costs just once before the end of 2024.
How many times do Federal Reserve officials now predict they will cut interest rates before the end of 2024?
Federal Reserve officials now predict they will cut interest rates only once before the end of 2024. This prediction was revised from their previous forecast in March, where they had anticipated cutting interest rates three times this year. The shift to a single cut is a more cautious approach due to the persistent inflation early in 2024.