FOMC Leaves Rates Unchanged, Signals One More Hike

The Federal Open Market Committee (FOMC) kept the federal funds rate unchanged on Wednesday, maintaining the range of 5.25% to 5.50%, as widely expected.

The central bank has raised its benchmark borrowing rate 11 times since March 2022.

In addition, FOMC members issued a new set of economic projections, indicating that they still anticipate raising interest rates before the end of the year, and that borrowing costs will likely be higher than they had previously predicted in 2024.

They now expect it will be appropriate to reduce the federal funds rate to 5.1% by the end of 2024, according to their median estimate, up from 4.6% when projections were last updated in June. They see the rate falling thereafter to 3.9% at the end of 2025, and 2.9% at the end of 2026.

“In determining the extent of additional policy firming that may be appropriate to return inflation to 2% over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments,” noted the FOMC statement.