2024-03-21 04:25:00 ET
Summary
- The Federal Reserve left the Fed funds target rate range unchanged at 5.25-5.5%.
- In its updated economic projections, the Fed continues to forecast three rate cuts this year and is penciling in three cuts next year.
- With growth and inflation projections revised stronger, the Fed believes that the risk is that interest rates will be higher than previously thought over the longer term.
By James Knightley and Chris Turner
Unanimous decision to keep rates on hold at 5.25-5.5%
As fully expected, there is no policy change from the Federal Reserve with the target rate range left at 5.25-5.5% in what was a unanimous decision by the FOMC. The key story is in the Fed's updated economic projections in which it continues to forecast three rate cuts this year - the market was concerned they could switch to just two - but instead are now penciling in only three cuts next year versus the four they had in their December update. This leaves their end-2025 rate median forecast at 3.9% (up from 3.6%), with 2026 at 3.1% (from 2.9%). Interestingly, they have tweaked their long-run forecasts for Fed funds to 2.6% from 2.5%, which we will come to later....
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U.S. Fed Holds Policy Steady And Sticks With Three-Cut View For 2024