Federal Reserve Chairman Jerome Powell testifies during the Senate Committee on Banking, Housing and Urban Affairs hearing entitled “The Semi-Annual Monetary Policy Report to Congress” on Thursday, March 7, 2024, in the Dirksen Building.
Tom Williams | Cq-roll Call, Inc. | Getty Images
Federal Reserve members still expect three interest rate cuts in 2024 even as the outlook for economic growth improves.
The Federal Open Market Committee’s March forecasts for interest rate cuts, or “dot plot,” show a median federal funds rate of 4.6% in 2024. With the current Fed funds rate in a range of 5.25% to 5.50% the dot plot implies three interest rate cuts of 0.25 percentage points.
Enlarge symbolArrows point outwards
The previous forecast from December also showed three rate cuts in 2024.
However, the projected change in real GDP for 2024 was 2.1% in the March forecast, compared to 1.4% in December. Core PCE inflation forecasts also rose to 2.6% from 2.4%.
There were some minor changes within the dot plot. In December, a major split emerged among individual members: two FOMC voters said there would be no cuts in 2024 and another saw six cuts. The most aggressive forecast was scaled back to just four cuts in the March forecasts.
Additionally, the median forecast for the Fed’s key interest rate in 2025 rose from 3.6% to 3.9%, representing one less cut.
The updated forecasts followed a recent series of inflation reports that have dampened hopes that the Fed has price increases under control. Last week, the core February consumer price index reading came in hotter than expected, rising 3.8% year over year. Traders have scaled back their expectations for rate cuts this year, according to the CME FedWatch tool.
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2024-03-20 18:34:04
www.cnbc.com
