Federal Reserve Bank Chairman Jerome Powell announces that interest rates will remain unchanged during a press conference at the William McChesney Martin Bank Building on May 1, 2024 in Washington, DC.
Chip Somodevilla | Getty Images
The Federal Reserve on Wednesday forecast just one rate cut through the end of 2024, down from its March forecast of three cuts.
The central bank’s 2024 “terminal rate,” or the rate at which its benchmark federal funds rate will peak, rose to 5.1%, equivalent to a target range of 5% to 5.25%. That means the Fed is forecasting a rate cut of only a quarter point from its current target range of 5.25% to 5.5%.
The so-called “dot plot” of the FOMC’s 19 members, both voters and nonvoters, showed that four officials favored no cuts this year, while seven members predicted one cut. The remaining eight officials predict two rate cuts in 2024.
Here are the Fed’s latest goals:
Back in March, the Fed predicted three rate cuts this year, with the federal funds rate reaching 4.6%. After Wednesday’s tepid inflation report but before the Fed’s new forecast, traders were forecasting two rate cuts this year.
In 2025, the central bank expects a total of four rate cuts, or a full percentage point cut in the benchmark federal funds rate.