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Fed Officials Hold to Forecast of Three Rate Cuts in 2024

Federal Reserve officials are maintaining their stance on interest rate cuts despite recent mixed economic indicators, including increased inflation rates over the past couple of months. In their latest Summary of Economic Projections released following a Federal Open Market Committee meeting, policymakers reiterated their expectation of reducing the benchmark federal funds rate by three quarters of a percentage point by the year's end. This forecast projects a median rate of 4.6% by year-end, indicating three anticipated cuts of a quarter point each from the current range of 5.25%-5.50%.

Comparing this projection with the previous one from December reveals consistency, as both forecasts anticipate three rate cuts in 2024. However, there's a slight upward revision in the expected median fed-funds rate for the end of next year, with officials now foreseeing it to reach 3.9%, up from the previous estimate of 3.6%.

Looking further ahead, officials envision a longer-term target for the fed-funds rate at 2.6%, a slight uptick from the 2.5% median rate projected in December. This indicates a cautious approach towards monetary policy, balancing the need for economic stimulus with concerns over inflationary pressures.