Fed Meeting 03/20/24 Leaves Rates Unchanged for the 5th time

US Fed Meet Highlights: The US Federal Reserve announced its interest rate decision today after a two-day Federal Open Market Committee (FOMC) meeting, leaving the benchmark interest rates unchanged at 5.25 per cent – 5.50 per cent for the fifth straight meeting, in line with Street estimates. However, the FOMC said that it expects three rate cuts in 2024 despite sticky inflation.

The rate-setting panel ended its second policy-setting meeting of the year and unanimously voted to hold the policy rate at the 23-year high mark, but said 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 two per cent.”

FOMC members also left the median projection for interest rates at end-2024 at the midpoint between 4.50 and 4.75. This means they still expect 0.75 percentage points of cuts before the end of the year, which would likely translate into three 0.25 percentage point cuts.

Alongside its rate decision, Fed policymakers also updated their economic forecasts, sharply upgrading the US growth outlook for this year to 2.1 percent, from 1.4 percent in December. Fed policymakers left the headline inflation forecast unchanged, but slightly raised the outlook for annual so-called “core” inflation — which excludes energy and food prices — to 2.6 per cent.

After raising the policy rate by 5.25 percentage points since March of 2022 in one of the swiftest Fed reactions to rising price pressures, the central bank has now kept the policy rate on hold since July 2023.