By Tom Burnett CFA
On June 14, 2023, the Federal Reserve announced that it would not be changing the current Fed Funds range of 5-5.25%, after ten consecutive decisions to raise interest rates. The Fed policy statement accompanying the announcement made clear the intention to reach the goal of 2% inflation. Future rate increases will be implemented if the desired inflation goals are not met. The decision to hold rates unchanged was unanimously approved by the 12 voting members of the Federal Open Market Committee.
The Fed also released its quarterly update of economic projections. It now sees inflation ebbing to 3.1% this year and averaging 2.5% in 2024. The Fed Funds rate is now expected to top out at 5.6% this year, before falling to 4.6% in 2024. In the March projections, the top Fed Funds rate was expected to be 5.1%, so the near term rate picture is now less optimistic for lower rates than the March forecast.
The next FOMC meeting announcement is set for July 26, 2023.