US Federal Reserve expects at least 3 interest rate cuts in 2024

ISTANBUL

The US Federal Reserve expects at least three interest rate cuts in 2024, according to projection materials released Wednesday.

The median projection for the federal funds rate showed 4.6% for 2024, down from 5.4% in 2023, which means the central bank may lower interest rates three times by 25 basis points each next year, or a total of 0.75%.

The projection indicates that the Fed could make another four rate cuts by 25 basis points each during 2025, carrying the federal funds rate down to 3.6%.

Moreover, the bank also penciled in an additional three rate cuts for 2026, for which the federal funds rate projection is estimated at 2.9%.

The Fed's two-day meetings during the first half of 2024 will conclude on Jan. 31, followed by March 20, May 1 and June 12.

Core PCE projection revised down

The central bank, in addition, revised p its 2023 growth forecast for the American economy to 2.6%, up from 2.1% made in September.

The personal consumption expenditures (PCE) price index was revised down to 2.8%, from 3.3%, for 2023.

Core PCE inflation, the central bank's preferred inflation indicator, was also revised down to 3.2% for 2023, from the 3.7% forecast made three months ago.

The unemployment rate is estimated to come in at 3.8% in 2023 and 4.1% in 2024, according to forecasts.