Fed Ends July 2024 Meeting and Remains Unwilling to Lower Rates

The Federal Reserve has finished its June 2023 meeting, leaving interest rates at a 5.25% to 5.50% target.

While recent CPI numbers show that the pace of inflation has declined, the Fed is concerned that more progress needs to indicate a sustained move towards its 2% target.

The Fed's decision to leave rates at current levels is guided by the fact that we have had a soft landing in the economy. While the labor market may be cooling, it isn't contracting. And, there are certainly areas of the economy that are not doing well, but many areas are booming. Since there is a stickiness to inflation, the Fed prefers to take a wait and see attitude before it lowers rates.

The majority of Fed voting members now see one cut this year, and it is unlikely that this cut will happen before its December meeting. The median targets for the Fed funds rate at the end of 2024 is 5.10%, at the end of 2025 is 4.10% and at the end of 2026 is 3.10%. The median long range target has gone up from 2.60% to 2.80%.