Federal Reserve Holds Interest Rates Steady but Projects Three Cuts This Year

Three cuts to a total of 75 basis points are on the table for 2024 as the Fed decided to keep rates unchanged at its March meeting.

Key Points:

• No surprises in the Fed’s decision.
• US dollar moved lower across the board.
• Officials still project three rate cuts this year.
• The US Federal Reserve maintained its interest rate unchanged at 5.25% to 5.50%, the two-day meeting agenda showed Wednesday. According to the economic projections, most Fed officials penciled in three interest rate cuts in 2024, staying in line with previous guidance on the matter.
• The initial reaction in the US dollar was a sharp move to the downside as forex markets digested the hot report. The EURUSD jumped about 40 pips before coming down back near unchanged levels. The USDJPY pulled back from its 2024 high of ¥151.80 to float near ¥151.40.
• Recent inflation pressures have raised concerns that the US economy might not be cooling off as intended. With that in mind, the policymakers at the Fed have stated they’re looking to gather more data before dialing back interest rates from their 23-year high.