Fed Leaves Interest Rate Unchanged, Expects Three Rate Cuts In 2024

On March 20, 2024, the Fed released its Interest Rate Decision. The Fed decided to leave the federal funds rate unchanged, in line with analyst expectations. As usual, the Fed noted that it remained strongly committed to returning inflation to the 2% objective.

The Fed commented: “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”

Today, the Fed has also released Economic Projections, which are carefully monitored by traders and investors.

GDP growth projection was raised from 1.4% to 2.1% for the year 2024. Next year’s GDP growth projection was also increased from 1.8% at December meeting to 2.0%.

Unemployment Rate is expected to be at 4.0% in 2024, compared to the previous projection of 4.1%. PCE inflation forecast remained unchanged at 2.4%, while Core PCE inflation projection was raised from 2.4% to 2.6%.

Importantly, the federal funds rate projection for 2024 remained unchanged at 4.6%. The dot plot shows that Fed expects three rate cuts in 2024.

The federal funds projection for 2025 was raised from 3.6% to 3.9%, which means that the pace of rate cuts would be slower than previously expected. In 2026, the Fed expects to see the federal funds rate at 3.1%, compared to the December projection of 2.9%.

Overall, projections do not look too hawkish. However, markets’ reaction would also depend on Powell’s comments during the press conference, which starts soon.

For a look at all of today’s economic events, check out our economic calendar.