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The Federal Reserve Board on Wednesday decided for the third consecutive time to maintain interest rates at their current 22-year high but opened the door to the possibility of three future interest rate cuts, starting in 2024. 

“Our restrictive stance on monetary policy is putting downward pressure on economic activity and inflation,” Federal Reserve Chair Jerome Powell said in a news conference following the meeting.  While the Fed is pleased with the progress that has been made toward its goal of 2% inflation, he said the central bank wants to see more progress before cutting interest rates. 

“The committee decided at today’s meeting to maintain the target range for the federal funds rate at 5.25% to 5.50% and to continue the process of significantly reducing our securities holdings,” Powell said. He also shared an optimistic assessment of what board members feel is the “likely scenario” going forward regarding interest rates. 

“If the economy evolves as projected, the median participant projects that the appropriate level of the federal funds rate will be 4.6% at the end of 2024, 3.6% at the end of 2025, and 2.9% at the end of 2026,” Powell said. “These projections are not a committee decision or a plan. If the economy does not evolve as projected, the path of policy will adjust as appropriate.” 

The stock market surged after the Federal Reserve decision was announced, with the Dow rising 170 points on Wednesday afternoon.