Federal Reserve: Fed policymakers stick to three-rate-cut view in 2024, barely

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Federal Reserve: Fed policymakers stick to three-rate-cut view in 2024, barely
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Nine of the Federal Reserve’s 19 policymakers see three quarter-point rate cuts this year, and nine see two or less, bolstering markets’ hopes for a pivot.

In December, the median policymaker wrote down an end-2025 rate of 3.6 per cent.| The Federal Reserve expects inflation to remain higher than previously forecast, but still signalling three 0.25 percentage point rate cuts this year.

“We know that reducing policy or strength too soon or too much could result in a reversal of the progress we’ve seen on inflation, and ultimately require even tighter policy to get inflation back to 2 per cent.” “The overall story, which is that of inflation moving down gradually on a sometimes bumpy road to 2 per cent, I don’t think that story has changed. I also don’t think that those readings add it to anyone’s confidence that we’re moving closer to that point .”

Bank of America chief economist Michael Gapen said he thought the Fed was not budging on attaining the inflation goals and that the central bank was being patient even while economic growth was strong. Nine of the Fed’s 19 policymakers see three quarter-point rate cuts this year, and nine see two or less. Only one penciled in more cuts than the median, compared with five in DecemberThe new interest rate projections suggest policymakers are more inclined to keep rates higher for longer to make sure inflation does not stall out above their 2 per cent goal, or flare up again.

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