Fed expects at least 3 rate cuts in 2024
Washington, US – The US Federal Reserve expects at least three interest rate cuts in 2024, according to projection materials released by the central bank.
The median projection for the federal funds rate showed 4.6% for 2024, down from 5.4% in 2023, which means the central bank may lower interest rates three times by 25 basis points each next year, or a total of 0.75%.
The projection indicates that the Fed could make another four rate cuts by 25 basis points each during 2025, carrying the federal funds rate down to 3.6%.
Moreover, the bank also penciled in an additional three rate cuts for 2026, for which the federal funds rate projection is estimated at 2.9%.
The Fed's two-day meetings during the first half of 2024 will conclude on January 31, followed by March 20, May 1 and June 12.
The US central bank, in addition, revised up its 2023 growth forecast for the American economy to 2.6%, up from 2.1% made in September. The personal consumption expenditures (PCE) price index was revised down to 2.8%, from 3.3%, for 2023. The unemployment rate is estimated to come in at 3.8% in 2023 and 4.1% in 2024, according to forecasts.
US Federal Reserve Chair Jerome Powell said Wednesday it is "premature to declare victory" in fight against high inflation, but said the bank has started considering when to lower interest rates.
"We are moving carefully in making that assessment of whether we need to do more or not," he said in a post-meeting news conference after the Fed skipped an interest rate hike for the fourth time this year, and kept its federal funds rate unchanged between the 5.25% - 5.5% target range – the highest in 22 years.
Powell said the question to lower interest rates "begins to come into view" and it was discussed by the members of the Federal Open Market Committee during the Fed's last meeting of 2023.