Fed Reinforces Caution on Cutting Interest Rates

The Federal Reserve does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%, minutes from the FOMC meeting in March showed. Policymakers generally noted their uncertainty about the persistence of high inflation and expressed the view that recent data had not increased their confidence that inflation was moving sustainably down to 2%. At the same time, the central bank remains highly attentive to inflation risks but it had also anticipated that there would be some unevenness in monthly inflation readings as inflation returned to target. The Federal Reserve left the fed funds rate steady at a 23-year high of 5.25%-5.5% for a fifth consecutive meeting in March 2024, in line with market expectations. The so-called dot plot showed policymakers were still planning to cut interest rates three times this year, similar to the quarterly forecasts in December.