Fed officials in December saw rate cuts likely, but path highly uncertain, minutes show
Federal Reserve officials in December concluded that interest rate cuts are likely in 2024, though they appeared to provide little in the way of when that might occur, according to minutes from the meeting released Wednesday.
At the meeting, the rate-setting Federal Open Market Committee agreed to hold its benchmark rate steady in a range between 5.25% and 5.5%. Members indicated that they expect three quarter-percentage point cuts by the end of 2024.
However, the meeting summary noted a high level of uncertainty over how, or if, that will happen.
«In discussing the policy outlook, participants viewed the policy rate as likely at or near its peak for this tightening cycle, though they noted that the actual policy path will depend on how the economy evolves,» the minutes stated.
Officials noted the progress that has been made in the battle to bring down inflation.
They said supply chain factors that contributed substantially to a surge that peaked in mid-2022 to have eased. In addition, they cited progress in bringing the labor market better into balance, though that also is a work in progress.
The «dot plot» of individual members' expectations released following the meeting showed that members expect cuts over the coming three years to bring the overnight borrowing rate back down near the long-run range of 2%.
«In their submitted projections, almost all participants indicated that, reflecting the improvements in their inflation outlooks, their baseline projections implied that a lower target range for the federal funds rate would be appropriate by the end of 2024,» the document stated.
However, the minutes noted an «unusually elevated degree of uncertainty» about the policy path.
