The Federal Reserve indicates that three interest rate cuts are likely to occur in 2024.


The Federal Reserve maintains its stance on multiple interest rate cuts for the remainder of the year, despite persistent inflationary pressures, offering reassurance to investors.

Key Points:

  • The Federal Reserve’s policy-setting Open Markets Committee has chosen to keep the target federal funds rate unchanged within the 5.25% to 5.5% range, consistent with its position since the previous summer.
  • Notably, the Fed staff’s median year-end forecasts project a reduction of 75 basis points in interest rates, despite concerns raised by higher-than-expected inflation data in early 2024.
  • Market response to the Fed’s announcement was positive, with 10-year U.S. Treasury yields slightly decreasing and the S&P 500 index registering a slight gain immediately afterward.
  • While the Fed’s median long-term interest rate forecast has seen a slight increase from 2.5% to 2.6% between December and March, economists warn that interest rates are likely to remain significantly higher than those observed over the past decade.

Anticipated Rate Cuts:

  • Market expectations suggest that the first rate cut since March 2020 may occur at the Fed’s June meeting, with a 55% probability according to “Fed swap” futures contracts tracked by CME Group’s FedWatch Tool.
  • Subsequent rate cuts are anticipated, with a 49% probability for July and a minimal 7% likelihood for May. The most probable scenario by year-end is a total reduction of 75 basis points, a considerable decrease from the 150 basis points indicated in January.


  • Initially, investors had targeted this Fed meeting as the anticipated date for the first rate cut, signaling a shift in the current tightening cycle. However, futures contracts implied a nearly 90% chance of rate cuts by March at the end of December and January, according to the FedWatch Tool.


  • Recent inflation data for January and February revealed persistent price increases, challenging expectations for a more accommodative stance from the Fed following the rate hikes in 2022-23 aimed at curbing inflation.
  • Despite the rate hikes, major U.S. stock indexes have shown resilience, with the S&P 500 rebounding from its 2022 losses to achieve new all-time highs in 2024, although smaller-cap indexes like the Russell 2000 remain below their 2021 peaks.


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