The Federal Open Market Committee voted unanimously on 20 March 2024 to hold the federal funds rate in the target range of 5.25% to 5.50%.
Chair Jerome Powell acknowledged in his post-meeting press conference that inflation remained above the 2% target but said the trend was gradually declining. The committee's updated Summary of Economic Projections, published alongside the rate decision, showed a median expectation of three quarter-point cuts in 2024, unchanged from the December SEP.
SEP MEDIAN HOLDS AT THREE CUTS FOR 2024
The dot plot, which maps individual committee members' interest rate expectations, showed the median year-end 2024 federal funds rate at 4.6%, implying three reductions of 25 basis points each from the prevailing target band.
Powell cautioned that the committee was not in a hurry and that any easing would be data-dependent. He indicated that the FOMC needed greater confidence that inflation was moving sustainably towards the 2% target before it would be appropriate to reduce the policy rate.
POWELL FLAGS GRADUAL DISINFLATION TREND
The chair pointed to continued progress on goods prices and some early moderation in shelter costs as evidence that the broader disinflation process remained intact. He underscored that the labour market remained strong and that the economy continued to grow at a solid pace.
Quantitative tightening, through which the Fed has been allowing its balance sheet to shrink by not reinvesting proceeds from maturing securities, was flagged as a topic the committee intended to discuss at upcoming meetings. Powell indicated that slowing the pace of the balance sheet run-off was likely to be appropriate fairly soon.
The next scheduled FOMC meeting is in May. The Fed began its tightening cycle in March 2022.
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