FOMC: The Longest Mile

BOSTON, MA, March 20, 2024 — The Federal Open Market Committee (FOMC) met today to assess the state of the U.S. economy and monetary policy.

What We Learned

As markets expected, the FOMC left the Federal Funds Target Rate unchanged at 5.25-5.50%. The decision illustrated that the Committee remains patient in its approach. It wants to balance the risks of easing prematurely (and inflation remaining above the 2% target) vs. moving too slowly (and causing a recession with an unnecessarily restrictive policy). Recent inflation releases present a dilemma for the Fed in that the data is still not quite clearing the “good data” hurdle required to signal the “all clear”. The Fed may be close, but the data still bears watching. Nonetheless, the FOMC’s updated dot plot maintained its median projection of three cuts of 25 bps by the end of 2024. It is notable that ten committee members expect three cuts or more for 2024, while nine committee members project two cuts or fewer.

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