FOMC Update
March 20, 2024
As expected, the FOMC did not change its benchmark rate range from 5.25%-5.50% for the fifth consecutive meeting. The Fed’s updated economic projections maintain 75bps of rate cuts in 2024. However, the 2025 rate cut projections were reduced to 75bps from 100bps. The median forecast for PCE inflation, the Fed’s preferred gauge, remains unchanged at 2.4% for 2024 while core PCE projection was increased by 0.2% to 2.6%. The economic growth estimate for 2024 was increased to 2.1% from 1.4%. Rates and Market:
- Fed Funds Target: 5.25%-5.50%
- Market Reaction: The S&P 500, UST 2s and UST 10s were mostly unchanged. The market is pricing a 70% chance of a 25bp rate cut at the June 2024 FOMC meeting, up from 60% before today’s announcement
The FOMC announced the following actions and analysis:
- Unanimous policy vote
- The Fed does not plan to cut rates “until it has gained greater confidence that inflation is moving sustainably toward 2%”
- The Fed increased their long-term rate projection to 2.6% from 2.5%, which implies long-term rates are slightly higher for longer
- The committee will continue to reduce the balance sheet by $95B each month as previously stated