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The Federal Reserve Didn't Do Anything But It Had Plenty to Say

Interest-Rates / US Interest Rates Mar 25, 2024 - 09:14 PM GMT

By: MoneyMetals

Interest-Rates

The Federal Reserve didn’t do anything at its March Federal Open Market Committee (FOMC) meeting, but Jerome Powell & Company had plenty to say.

The Fed’s dovish rhetoric sent a wave of relief through the markets and drove stocks to yet another all-time high.

People would probably be wise to remember that saying isn’t doing.


What the Federal Reserve Did

The FOMC held interest rates steady, set between 5.25 and 5.5 percent. Rates have been at this level since last July.

The official FOMC statement was substantively the same as the statement issued after the January meeting, featuring the typical mishmash of Fed-speak.

“In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”

Make of that what you will.

The only change to the statement was in its overview of job gains. In January, the FOMC reported, “Job gains have moderated since early last year but remained strong.” The March statement removed the phrase, “have moderated since early last year.”

So, from a substantive standpoint, the FOMC meeting was a big yawner.

What the Fed People Said

The March meeting was all about “open-mouth operations.” Since the central bank didn’t do anything, everybody focused on what Jerome Powell and the committee members said.

And they said plenty.

The highlight of the meeting was the release of an updated “dot plot” projecting the trajectory of interest rate policy.

Despite sticky price inflation, the FOMC indicated that it still plans to cut interest rates three times in 2024. If it moves in 25-basis point increments as expected, that would lower rates to between 4.5 and 4.75 percent by the end of the year.

The committee projects additional cuts in 2025, dropping rates to around 3 percent.

By Mke Maharrey

MoneyMetals.com

Mike Maharrey is a journalist and market analyst for MoneyMetals.com with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.

© 2024 Mike Maharrey - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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