FOMC Holds Rates Steady, Raises 2024 GDP & Inflation Outlook

The Federal Reserve Open Market Committee gave their latest monetary policy statement today, holding the target range at 5.25% to 5.5%, as widely expected.

Read the Federal Reserve Statement Press release here

The FOMC also released their “Summary of Economic Projections” (SEP), which showed  notable upward revisions of 2024 GDP (median moved from 1.4% to 2.1%) and the Core PCE inflation rate (from 2.4% in December to 2.6%).

The SEP also included the closely watched Fed ‘Dot Plot’, which showed the majority of members seeing interest rates for 2024 falling to around 4.6%, and signaling only three rate cuts in 2025 vs. four rate cuts projected in December.

FOMC Press Conference: Quick Takeaways

• Fed Chair Jerome Powell danced around the question of whether they’d sprinkle some rate cuts on the economy cake in May or June. With the grace of a seasoned dodgeball player, he signaled those cuts will likely come at some point this year.
• Powell stuck with recent Fed rhetoric that the members would like to see a sustainable move to the 2% target, and generally brushed off the recent upside surprises in inflation data, saying they are on on path but it will be bumpy.
• Finally, Powell also noted that it will soon be appropriate to slow its pace of its bond inventory reduction (i.e., quantitative tightening).  The current pace is a $95 billion per month runoff of a $7.5T asset portfolio, which grew tremendously to nearly $9 trillion during the COVID pandemic.

Market Reactions

Intermarket Price Action: 5-minute

Dollar, Gold, S&P 500, Oil, U.S. 10-yr Yield Overlay Chart by TradingView

Dollar vs. Major Currencies: 5-minute

Overlay of USD vs. Major Currencies Chart by TradingView