Fed Officials Signal Interest Rate Hold. United States central bank officials or the Federal Reserve agree that maintaining a restrictive monetary policy stance for some time to come is the right step.
The minutes of the December 12-13, 2023 Federal Open Market Committee (FOMC) meeting noted that Fed officials also acknowledged that interest rates may already be at record levels and would begin cutting interest rates in 2024.
Despite this, officials reiterated that policies that remain restrictive for some time until it is clear that inflation is moving down in a sustainable manner would be the right step. The minutes indicated increased optimism among FOMC officials regarding the path of inflation, noting clear progress.
The committee expressed a willingness to cut the Fed’s interest rates in 2024 if the trend continues, although they gave no indication easing could begin in March, as market players had hoped.
At the meeting, state central bankers voted unanimously to keep interest rates at the target range of 5.25% – 5.5% for the third time in a row. Although the FOMC statement left the door open for another hike, officials’ forecasts signaled an end to the most aggressive policy tightening cycle in a generation.
The Fed’s quarterly projections predict three interest rate cuts in 2024 of 75 basis points (bps). This latest outlook, combined with Fed Chair Jerome Powell’s comments after last month’s meeting, sparked a rally in stocks and bonds.
Fed Officials Signal Interest. Futures markets have anticipated that the Fed will cut interest rates six times this year, starting with a possible 25 bps cut in March.
However, some Fed officials have pushed back against expectations of any immediate policy moves in recent weeks. The first FOMC meeting for 2024 is scheduled for January 30-31.
