From Morningstar: 2024-06-13 05:40:00

The Federal Reserve is now projecting one interest rate cut in 2024, contrary to expectations of multiple cuts due to delayed rate adjustments caused by inflation. Core PCE inflation surged to 4.4% in Q1 but has since decreased to 2.8%, indicating a return to a less inflationary environment.

The Fed acknowledges modest progress towards its 2% inflation target, updating its core PCE inflation forecast for Q4 to 2.8%. Despite the Fed’s shift to predicting one rate cut in 2024, some experts believe inflation will remain lower than expected, prompting two to three potential rate cuts this year.

In a departure from previous estimates, the Fed has raised its projection for the long-run federal-funds rate to 2.8% from 2.6%. This adjustment signals a reassessment of the interest rate needed for economic growth and the fulfillment of the Fed’s dual mandate of full employment and 2% inflation.



Read more at Morningstar: Cautious Fed Sees One Rate Cut in 2024