By Dan Burrows – Kiplinger Finance
The Federal Reserve kept interest rates unchanged and penciled in one quarter-point cut in 2024.
The Federal Reserve made the widely expected move of leaving interest rates at a 23-year high on Wednesday and signaled just one quarter-point cut for the remainder of the year.
The central bank’s rate-setting committee wrapped up its regularly scheduled two-day policy meeting by keeping the short-term federal funds rate unchanged at 5.25% to 5.5%. More interesting was the quarterly Summary of Economic Projections (SEP), also known as the dot plot, which shows the Federal Open Market Committee’s (FOMC) estimated path forward for rates.
Per the dot plot, the Fed now sees just one quarter-point cut coming before year-end, down from the three cuts it forecast in March. Overly optimistic market participants were expecting at least six rate reductions in 2024, but sticky inflation data and a robust labor market forced the Fed to delay its pivot toward easing. As part of that pushed out timeline, the FOMC median forecast now sees four quarter-point cuts in 2025, up from three cuts expected in the previous projections.