WASHINGTON, Wednesday, June 19, 2024 – The Federal Reserve kept interest rates unchanged on Wednesday, June 12 and signaled a more cautious approach to future reductions, projecting only one cut for the remainder of 2024.1
The Federal Open Market Committee (FOMC), the Fed’s policymaking arm, opted to maintain the benchmark federal funds rate in its current target range of 5.25% to 5.5%.
This decision comes after eight consecutive meetings where rates were held steady.
While inflation has shown signs of slowing in recent months, the committee expressed a commitment to maintaining price stability.
The FOMC’s updated economic projections forecast a slightly higher year-end inflation rate of 2.6% compared to the 2.4% anticipated in March.
This shift in outlook reflects the Fed’s prioritization of tamping down inflation over boosting economic growth. The committee acknowledged the potential risks associated with rising interest rates, such as a slowdown in job creation. However, it emphasized its resolve to bring inflation under control, even if it necessitates a more gradual pace of rate cuts.
The Fed’s revised projections also indicate a slower pace of rate cuts compared to earlier forecasts. In March, policymakers anticipated three rate cuts for 2024. However, the new projections show just one cut is likely this year, with the possibility of a more aggressive easing in 2025 and 2026.
Financial markets reacted mildly to the Fed’s decision, with interest rates on Treasury bonds showing minimal movement.
Fed Policy Release can be seen here.
- federalreserve.gov: https://www.federalreserve.gov/newsevents/pressreleases/monetary20240612b.htm[↩]
