Fed rate cuts in 2024?

by Tiffany Wang, WOO Analyst

In a widely anticipated decision, the Fed has announced its intention to maintain the overnight federal funds rate within the established range of 5.25% to 5.5%, marking the third consecutive meeting without any alterations to monetary policy. While the market largely expected this decision, the unexpectedly dovish stance adopted by the Fed came as a surprise. This unexpected optimism is attributed to "promising inflation and moderating jobs data."

Consequently, the markets experienced an upswing, with US equities concluding the day not far from their historical highs. The Fed officials' median Summary of Economic Projections indicates a projected decrease of three-quarters of a percentage point in the federal funds rate to 4.6% by the close of 2024 and a further reduction to 3.6%, implying four quarter-point cuts, by 2025.

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