Today, the Fed has also released Economic Projections, which are carefully monitored by traders and investors.
GDP growth projection was raised from 1.4% to 2.1% for the year 2024. Next year’s GDP growth projection was also increased from 1.8% at December meeting to 2.0%.
Unemployment Rate is expected to be at 4.0% in 2024, compared to the previous projection of 4.1%. PCE inflation forecast remained unchanged at 2.4%, while Core PCE inflation projection was raised from 2.4% to 2.6%.
Importantly, the federal funds rate projection for 2024 remained unchanged at 4.6%. The dot plot shows that Fed expects three rate cuts in 2024.
The federal funds projection for 2025 was raised from 3.6% to 3.9%, which means that the pace of rate cuts would be slower than previously expected. In 2026, the Fed expects to see the federal funds rate at 3.1%, compared to the December projection of 2.9%.
Overall, projections do not look too hawkish. However, markets’…
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