Fed Members' 2024 Rate Predictions Shift to Higher Levels, No Dissent
In March, 10 Federal Reserve members predicted that interest rates would be at 4.625 percent or lower by the end of 2024, but now, none hold that view
June Dots Summary
No Cuts: 4 (previously 2 in March)
1 Cut: 7 (previously 2 in March)
2 Cuts: 8 (previously 5 in March)
3 Cuts: 0 (previously 9 in March)
4 Cuts: 0 (previously 1 in March)
The Fed adjusted its 2024-2025 projections from 2+3 cuts to 1+4 cuts, indicating a cautious approach and a need for more evidence before deciding on rate cuts The Fed also revised its end-2024 inflation expectations upwards but maintained its unemployment forecast
There were no dissents at today's meeting While the market had different expectations, it remains to be seen if Powell will address this in the press conference
Market Performance since the Last FOMC Statement (May 1st)
Stocks and bonds have outperformed, with stocks at record highs
Gold is flat, and the dollar is down slightly
Oil prices have dropped significantly
These movements have been driven by disappointing US macroeconomic data, which has led to hopes for a more dovish Fed, with two rate cuts expected in 2024 and an additional 92 basis points of cuts in 2025 Despite concerns about stagflation, inflation surprises have recently declined
Today's new DotPlot is anticipated to show a reduction from three to two cuts for 2024, with a possibility of adjusting down to just one cut
Fed's Actions
The Fed held the benchmark rate steady at 5.25 to 5.5 percent
Updated its inflation language to "modest further progress"
However, the dot-plot now suggests just one 25 basis points cut in 2024 and four 25 basis points cuts in 2025, indicating a hawkish stance
Additionally, the longer-run federal funds rate estimate increased to 2.8 percent, marking the second consecutive rise Over six months, policymakers have raised the long-term benchmark rate by over a quarter percentage point
There were no dissents today, continuing a streak of unanimous FOMC decisions for 16 meetings, the longest since Alan Greenspan's 17-meeting streak from August 2003 to September 2005
For further details, you can read the full statement below (with minimal changes) [Read the full redline below]