
the staff of the Ridgewood blog
Washington DC, on Wednesday, the Federal Reserve opted to maintain interest rates at their current levels and kept its projection unchanged, indicating the potential need for three rate cuts in 2024.
Following its latest policy meeting, the central bank decided to keep its benchmark interest rate within the range of 5.25% to 5.50%, the highest since 2001.
While the Fed retained its forecast for reducing this rate by 0.75% by year-end, it emphasized in its policy statement that it 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%.”
Nine officials projected the necessity for three rate cuts this year, while five officials anticipated two cuts.
Despite January and February’s higher-than-expected inflation figures, Fed Chair Jay Powell stated in a press conference that they haven’t altered the overall narrative of inflation gradually approaching 2%. However, he noted that the data indicated prudence in delaying any cuts until greater confidence is attained.
Powell refrained from specifying a timeline for potential rate adjustments, stating that the Fed might commence policy adjustments “at some point this year.”
Market expectations favor a first cut in June, with the likelihood increasing following the Fed’s decision, which also buoyed the stock market.
In its updated projections, the Fed slightly tempered its outlook for interest rate cuts in 2025, now anticipating the need for three additional cuts next year, down from the previously forecasted four.
Additionally, officials revised the inflation outlook to 2.6% for this year, up from 2.4%, with expectations of reaching 2.2% next year.
Despite acknowledging elevated inflation, the Fed underscored its commitment to closely monitoring associated risks.
While core consumer prices rose by 3.8% annually in February, down from the previous month’s 3.9%, they remained significantly above the Fed’s 2% target. Nonetheless, the core Personal Consumption Expenditures index, the Fed’s preferred inflation gauge, exhibited more favorable progress, increasing by 2.8% in January.
Powell emphasized the Fed’s intention not to overreact to short-term data fluctuations while remaining vigilant in its approach.
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Powell checkmated. Can’t hold rates at this level, can’t stop prices from rising.
time to cut 25 bps alredy
This will get the president re-elected.
this and ballot stuffing…
I’m reminded of the book “Lord of the Flies”