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Fed's December Meeting
News from the FOMC policy statement, interest-rate decision, summary of economic projections, and Jerome Powell's presser.
Last Updated:
Dec. 14, 2023 at 3:57 AM EST
5 months ago
Futures Markets Expect 6 Rate Cuts in 2024, Versus 4 Earlier
Investors are penciling in even more cuts to interest rates following the latest news on monetary policy from the Federal Reserve.
Federal Open Market Committee members updated their projections for future interest rates on Wednesday. Officials’ median estimate now calls for the federal-funds rate to end 2024 at 4.6%—implying three quarter-point cuts from the committee’s current target range of 5.25% to 5.50%. That compared with futures-market pricing before the meeting that pointed to a target rate of around 4.00% to 4.25% at the end of 2024, which would mean four or five quarter-point cuts.
Markets took an even more dovish message from the committee’s statement announcing the decision, its economic projections, and a press conference from Federal Reserve Chair Jerome Powell. The greatest odds implied by futures pricing on Wednesday afternoon were for a year-end 2024 fed-funds rate in the range of 3.75% to 4.00%. That would mean 1.5 percentage points of reductions in the Fed’s target next year, or six cuts of a quarter-point each.
It would likely take faster-than-expected progress on returning inflation to the Fed’s 2% target, or a more severe economic downturn in 2024, to get that kind of easing of monetary policy.