Fed policymakers see just one rate cut this year, 4 cuts in 2025

June 12 - U.S. central bankers believe they’ll cut interest rates just once this year, two fewer than they thought in March as inflation approaches their 2% goal more slowly than they had expected.

In March, the last time the Fed released quarterly projections, most U.S. central bankers anticipated at least three 25 basis point rate cuts in each of 2024 and 2025. That would have put the policy rate in the 3.75%-4% range by the end of next year. The Fed has kept its target for the overnight bank-to-bank lending rate in its current range since last July in a bid to squeeze high inflation out of the economy without massive harm to the job market.

That’s slightly higher than the 2.4% they saw in March, according to the projections, even as they expect to keep borrowing costs higher for longer. PCE inflation registered 2.7% in each of the last two months.

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