By Ovunc Kutlu
ISTANBUL (AA) – The US Federal Reserve expects at least three interest rate cuts in 2024, according to projection materials released Wednesday.
The median projection for the federal funds rate showed 4.6% for 2024, down from 5.4% in 2023, which means the central bank may lower interest rates three times by 25 basis points each next year, or a total of 0.75%.
The projection indicates that the Fed could make another four rate cuts by 25 basis points each during 2025, carrying the federal funds rate down to 3.6%.
Moreover, the bank also penciled in an additional three rate cuts for 2026, for which the federal funds rate projection is estimated at 2.9%.
The Fed's two-day meetings during the first half of 2024 will conclude Jan. 31, followed by March 20, May 1 and June 12.
- Core PCE projection revised down
The central bank, in addition, revised p its 2023 growth forecast for the American economy to 2.6%, up from 2.1% made in September.
The personal consumption expenditures (PCE) price index was revised down to 2.8%, from 3.3%, for 2023.
Core PCE inflation, the central bank's preferred inflation indicator, was also revised down to 3.2% for 2023, from the 3.7% forecast made three months ago.
The unemployment rate is estimated to come in at 3.8% in 2023 and 4.1% in 2024, according to forecasts.