Federal Reserve holds interest rates, expects three cuts by end of year

In a largely anticipated move, the Federal Reserve chose to hold interest rates at their existing level on Wednesday following the Federal Open Market Committee two-day policy meeting. 

Central bankers are calling for three rounds of rate cuts by the end of 2024, projection materials released Wednesday show. 

The rate hike pause marks the central bank’s fifth since consecutively raising interest rates from March 2022 to July 2023. Persistent inflation and improving employment data contributed to central bankers’ decision to hold rates, they said. 

“The Committee judges that the risks to achieving its employment and inflation goals are moving into better balance,” Wednesday’s statement read . “The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.”

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Longer-term inflation expectations appear to remain “well anchored,” Chair Jerome Powell said Wednesday during a press conference. 

“We believe that our policy rate is likely at its peak for this tightening cycle, and that if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint, at some point this year,” Powell said. 

Stocks inched higher and cryptocurrencies were mixed on the news. Bitcoin ( BTC ) was relatively flat in the moments after the Fed released its statement at 2 pm ET. The largest cryptocurrency is down about 1% over the past 24 hours. 

Ether ( ETH ) similarly traded sideways, hovering around $3,300 at time of publication – about 0.3% higher over 24 hours. 

The Nasdaq Composite and SP 500 indexes rallied on the news, gaining as much as 0.4% and 0.3%, respectively, on the release. 

Analysts will be looking for signs from Powell and other central bankers about when rate cuts may begin. Markets on Wednesday expected about a 70% chance a rate cut will come in June, according to data from CME Group.

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