Federal Reserve Chairman Jerome Powell testifies at a hearing of the Senate Committee on Banking, Housing, and Urban Affairs entitled “Semi-Annual Monetary Policy Report to Congress” at the Dirksen Building on Thursday, March 7, 2024.
Tom Williams | Cq-roll Call Inc | Getty Images
Despite improved economic growth prospects, Fed members still expect three interest rate cuts in 2024.
Federal Open Market Committee March predict The rate cut chart, or “dot plot,” shows the median federal funds rate in 2024 at 4.6%. The current range of the federal funds rate is 5.25% to 5.50%, and the dot plot means three interest rate cuts, each of which is 0.25 percentage points.
Previous forecasts in December also pointed to three rate cuts in 2024.
However, March forecast a 2.1% change in real GDP for 2024, up from 1.4% in December. The core personal consumption expenditures inflation forecast also rose to 2.6% from 2.4%.
There are some minor changes in the dot plot. In December, greater disagreements emerged between individual members, with two FOMC voters saying zero rate cuts would be implemented in 2024 and another saying six rate cuts would be implemented in 2024. The most aggressive forecasts have fallen back to March forecasts with just four cuts.
Additionally, the median forecast for the federal funds rate in 2025 rose to 3.9% from 3.6%, meaning one fewer rate cut.
The latest forecasts come after a series of recent inflation reports that have dampened the Fed’s hopes of reining in rising prices. Last week, core data on the consumer price index in February exceeded expectations, rising 3.8% from the same period last year. Traders have been lowering expectations for a rate cut this year, according to the CME Group’s FedWatch tool.
