Fed Leaves Rates Unchanged; Raises PCE Inflation Forecasts For 2024

Vladimir Zernov
Updated: Jun 12, 2024, 19:27 GMT+00:00

Key Points:

  • Fed left the federal funds rate unchanged at 5.25% - 5.5%.
  • PCE inflation forecast for 2024 was changed from 2.4% to 2.6%.
  • The longer run federal funds rate projection was increased from 2.6% to 2.8%.
Fed Interest Rate Decision

On June 12, 2024, Federal Reserve released FOMC Statement. Fed decided to maintain the target range for the federal funds rate at 5.25 – 5.5%, in line witht analyst expectations.

Fed noted that economic activity conitnued to expand at a solid pace, while the unemployment rate remained low.

Fed does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation was moving towards its 2% target.

Fed has also released its economic projections. The forecasts for GDP growth and Unemployment Rate remained unchanged at 2.1% and 4.0% for 2024.

PCE Inflation forecast was raised from 2.4% to 2.6%, while Core PCE inflation forecast was increased from 2.6% to 2.8% for this year.

The federal funds rate projection was increased from 4.6% to 5.1%. The Federal funds rate projection for 2025 was also increased from 3.9% to 4.1%, while the forecast for 2026 remained unchanged at 3.1%.

Interestingly, Fed has also changed its longer run forecast for the federal funds rate, which was raised from 2.6% to 2.8%. The Fed’s estimate of a neutral rate has moved higher, which may have a material impact on market dynamics.

About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

Did you find this article useful?