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The US central bank announced on Wednesday that it left the policy rate, federal funds rate, unchanged at the range of 5.25%-5.5% following the December meeting. This decision came in line with the market expectation.
The revised Summary of Projections (SEP) showed that that Fed officials’ median view of policy rate at the end of 2024 stood at 4.6%.
Quotes from Dot Plot
“Fed officials’ median view of fed funds rate at end-2025 3.6% (prev 3.9%).”
“Fed officials’ median view of fed funds rate at end-2026 2.9% (prev 2.9%)”
“Fed projections imply 75 basis points of rate cuts in 2024 from current level.”
“Fed officials’ median view of fed funds rate in longer run 2.5% (prev 2.5%)”
“No policymaker sees end-2024 policy rate above current level.”
“Fed projections show 8 of 19 officials see policy rate above 2024 median, 5 see it below that.”
“Fed officials see inflation at 2.4% in 2024, returning to 2% target in 2026.”
“Fed policymakers see weaker GDP growth, the same unemployment rate in 2024 compared with September projections.”
Quotes from Fed policy statement
“Inflation has eased but remains elevated and FOMC remains strongly committed to returning inflation to 2% target.”
“Data suggests economic activity has slowed from third quarter’s strong pace.”
“In determining the extent of any additional policy firming that may be appropriate, will take into account a range of economic factors.”
“Job gains have moderated but remain strong and unemployment rate remains low.”
“Tighter financial and credit conditions are likely to weigh on economic activity, hiring and inflation, but extent of effects remains uncertain.”
“Will continue bond-holding reductions as previously planned.”
