No Surprise as Interest Rates Hold Steady at June FOMC Meeting

The updated projection shows the likelihood of one rate cut by the end of 2024.

For the seventh consecutive Federal Open Market Committee (FOMC) meeting, the Federal Reserve (Fed) elected to hold interest rates steady. The decision, announced on June 12 at the end of the two-day session, was widely assumed by market participants given the Fed’s higher-for-longer stance. The federal funds rate target range remains at 5.25%-5.50%, as it has since July 2023.

As part of this FOMC meeting, an updated Summary of Economic Projections and dot plot were released and there were changes compared to the last release in March, most notably the number of projected rate cuts by the end of 2024. That number dropped to one cut, down from the March projection of as many as three cuts.

“Although Fed officials are saying that they consider today’s federal funds rate restrictive enough, the truth is that by not lowering interest rates more this year, it means that they are tightening monetary policy, as the real federal funds rate will continue to move higher as inflation continues to come down,” said Raymond James Chief Economist Eugenio Alemán.

The updated dot plot forecasts up to four rate cuts in 2025 and 2026, up from three in March’s projection. The long-term federal funds rate was also moved higher, from 2.6% in March to 2.8% during this SEP projection.