From CNBC: 2024-06-12 14:58:57

The Federal Reserve maintained its key interest rate and only expects one cut by year-end. This shift away from more aggressive easing pleased traders, causing the S&P 500 to hit a record high. Inflation forecasts are slightly optimistic, with the Fed targeting a return to its 2% goal.

Along with keeping rates steady, the Fed released updated projections, predicting five total cuts through 2025, leaving the benchmark rate at 4.1% by next year’s end. The long-run interest rate projection also rose to 2.8%, showing a slightly hawkish stance among central bankers.

Further indicating a more hawkish tone, four officials now support no cuts this year. Inflation projections were raised slightly for 2024 to 2.6%, but the Fed doesn’t expect to hit its 2% target until 2026. The decision comes amid volatile markets and a year of rate increases reaching the highest level in over two decades.

Inflation rates remain above target, but core readings have dropped slightly. The economic outlook for 2024 is mixed, with GDP showing slow growth early in the year before a recent uptick. Despite hopes for rate cuts earlier in the year, the Fed remains cautious due to persistent inflation concerns.

Read more: Federal interest rate sees no change