Federal Reserve Chair Jerome Powell delivered remarks during a press conference in Washington, D.C., following a two-day meeting of the Federal Open Market Committee (FOMC) on July 31, 2024.
The Federal Reserve is projecting a further reduction in interest rates by another half point before the end of 2024, with two more policy meetings scheduled before the year ends. The “dot plot” reflects that 19 members of the FOMC, including both voting and nonvoting members, anticipate the benchmark federal funds rate to be at 4.4% by year-end, translating to a target range of 4.25% to 4.5%. The remaining meetings for 2024 are slated for November 6-7 and December 17-18.
Looking forward to 2025, the central bank forecasts interest rates to decrease to 3.4%, signifying an additional full percentage point cut. By 2026, the rates are expected to drop to 2.9%, indicating another half-point reduction.
On Wednesday, the Federal Reserve lowered the federal funds rate to a range of 4.75% to 5%, marking its first rate cut since the early stages of the Covid-19 pandemic.
The Fed’s latest targets were detailed in a statement, which noted, “The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent and judges that the risks to achieving its employment and inflation goals are roughly in balance.”
Moreover, Federal Reserve officials adjusted their expected unemployment rate for the current year to 4.4%, up from the 4% projection made in June. Simultaneously, they lowered the inflation outlook to 2.3% from a previous estimate of 2.6%. For core inflation, the Committee revised its projection to 2.6%, down by 0.2 percentage points from June.
— Reporting contributed by Jeff Cox from CNBC.
