The Federal Reserve voted to keep interest rates flat at its March meeting but indicated it could make three cuts later this year as inflation eases.
Following the vote, the 12 members of the Federal Open Market Committee released a statement affirming its goal of achieving maximum employment and a 2 percent inflation rate over the long run. In line with that goal, it explained that it decided to maintain the target range for federal interest rates between 5.25 and 5.5 percent. “In considering any adjustments to the target range for the federal funds rate, the committee will carefully assess incoming data, the evolving outlook, and the balance of risks,” the statement said. “The committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”
However, the Fed is still anticipating rate cuts later this year. In its economic projections released on March 20, the agency signaled that it would reduce federal interest rates in stages throughout the rest of the year to a target rate of 4.6 percent by December. That would achieve a 2.1 gross domestic product (GDP) growth for 2024 and 2 percent GDP growth in 2025, according to the Fed’s projections.