Fed expected to pave way for rate cuts next year as inflation fight comes to an end

foxbusiness.com:

Stifel Financial CEO and Chairman Ronald Kruszewski discusses whether the market is too optimistic about a Fed rate cut on 'The Claman Countdown.'

After a nearly two-year battle against high inflation, the Federal Reserve is all but ready to declare victory at the conclusion of its meeting on Wednesday and open the door to cutting interest rates in 2024. 

Fed officials are widely expected to hold interest rates steady at a range of 5.25% to 5.5%, the highest level in 22 years, and make only minor changes to their policy statement. 

However, Wall Street is even more laser-focused on the new quarterly economic projections that will be released after the Fed's meeting – and that will include a forecast of where policymakers expect their key rate to be at the end of 2024.

«We expect that the Fed will offer a more encouraging outlook on growth, employment and inflation and set the stage for rate cuts,» said Joe Brusuelas, RSM chief economist.

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While the economic projections may paint a more optimistic picture of the economy, Fed Chairman Jerome Powell is expected to «stick to the script» about keeping interest rates elevated until policymakers are convinced that inflation has returned to the central bank's 2% target, according to Greg McBride, chief financial analyst at Bankrate.  

In recent weeks, Powell has continued to keep the possibility of another rate hike in play and downplayed recent declines in consumer prices, suggesting it is still too early to declare victory – or discuss when the central bank may begin to cut interest rates.

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«It would be premature to