Rate cuts likely in 2024 but outlook still uncertain, FOMC minutes show
The Federal Open Market Committee (FOMC) discussed at its last meeting that interest-rate cuts were likely to happen in 2024, but didn't give any details on when the central bank might start to loosen monetary policy.
Minutes of the FOMC's 12-13 December meeting showed that "almost all participants indicated that, reflecting the improvements in their inflation outlooks, their baseline projections implied that a lower target range for the federal funds rate would be appropriate by the end of 2024".
However, the Fed said that members' outlooks were "associated with an unusually elevated degree of uncertainty" and that rate hikes could be appropriate if things take a turn for the worse.
The meeting, in which the FOMC kept the federal funds rate at 5.25% to 5.5%, coincided with changes to the Fed's so-called dotplot graph, in which projections for where future rates would be suggested rate cuts could begin as early as March or May 2024.
Minutes published on Wednesday showed that Fed policymakers talked about the "diminished" upside risks to inflation, while some participants were worried about how long the current restrictive monetary policy should continue given the "downside risks to the economy" from elevated interest rates.
"A few suggested that the Committee potentially could face a tradeoff between its dual-mandate goals in the period ahead," the minutes said, referring to its two priorities of keeping a lid on price pressures and maintaining a low unemployment rate.