What To Expect From The Fed’s Remaining Meetings Of 2024

The U.S. Federal Reserve is currently expected to cut interest rates by a little more than one percent over the course of its seven remaining scheduled meetings of 2024. This may leave short-term interest rates at approximately 4% by December 2024, based on market forecasts. Most cuts may come in the second half of the year.

This potential interest rate reduction is prompted by inflation trending closer to the Fed’s 2% annual target. The implication is that less restrictive monetary policy is likely appropriate because of cooling inflation.

The Trajectory For Lower Interest Rates

The CME’s FedWatch Tool which tracks fixed income markets’ implied expectations for short-term rates, currently forecasts interest rates to most likely come down by between 1% and 1.5% by year end.

Fed officials last made forecasts in December 2023. They forecast fewer interest rate cuts than fixed income markets currently anticipate, but the Fed has signaled in recent weeks that interest rate cuts in 2024 are likely. The Fed will next update their forecasts at the conclusion of their next scheduled meeting on March 20.

The Macroeconomic Data

The Fed’s justification for raising interest rates over recent years was that inflation was too high. Consumer Price Inflation peaked at over a 8% annual rate in 2022.

Since then inflation has fallen substantially. On recent annual data, inflation stands at little over 3%. The Fed has expressed concern that inflation may not fall all the way to its 2% annual target, especially if services prices fail to cool. Nonetheless the Fed recognizes that inflation has cooled substantially and don’t expect that trend to reverse.

There are also fears that high interest rates may trigger a recession, which is historically typical. Because of this, the Fed is watching the jobs market closely for weakness. Soft jobs numbers could suggest a recession is coming.

However, the jobs market has held up better than expectations on recent reports. If the Fed sees weakening jobs data may encourage the Fed to be more aggressive in moving to cut interest rates this year.

The 2024 Fed Meeting Calendar

The Fed’s committee is scheduled to announce monetary policy decisions at 2 p.m ET on the following dates in 2024:

  • March 20
  • May 1
  • June 12
  • August 31
  • September 18
  • November 7
  • December 18

Of these meetings, March, June, September and December will include a Summary of Economic Projections where policymakers update their forecasts for interest rates and other key economic variables.

Monetary policy decisions will be followed by a press conference with Chair Jerome Powell 30 minutes after each announcement. In addition, three weeks after each meeting, the Fed will release meeting minutes, offering further context on decision making.

When Might Cut Starts?

The Fed believes March may be too early to cut interest rates. Fixed income markets largely agree, especially in light of recent strong jobs numbers. As such, that could lead to the first rate cut being made in May. After that the Fed may cut rates at alternate meetings on current expectations. However, more encouraging inflation data or concerning jobs reports could encourage the Fed to make deeper or more frequent cuts.

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2024-02-12 11:45:00

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