The Federal Reserve plans three rate cuts later this year

What to Expect in the Fed’s Interest Rate Statement and Economic Projects at the 2024 Fed Meeting – Follow-Up with Mr. Powell

Federal Reserve officials will conclude a two-day policy meeting on Wednesday, releasing a fresh decision on interest rates at a time when economic growth remains resilient and inflation has shown recent signs of stubbornness.

This is the first update to the projections since December. For what the Fed says about interest rates, economists will watch the estimates very closely. Policymakers expected the rates to fall to 4.5 percent by the end of 2024, and then to 3.6 percent by the end of 2025.

Some economists now expect the forecasts to point to two rate cuts in 2024, to a level of about 4.9 percent, rather than the three cuts that were previously expected.

Here is what to look for in the Fed’s policy statement and its economic projections, which come out at 2 p.m., along with the 2:30 p.m. news conference.

It is possible that officials could predict slightly quicker price increases at the end of 2024 due to the recent staying power of inflation.

Arguably the most important part of the Fed meeting will be the 2:30 p.m. news conference with Mr. Powell. He gave two days of testimony in Congress in March but his comments on Wednesday will be watched to see if he updates his thinking after the Fed debates a new policy.

The Fed chair may be asked to clarify a comment he made during those appearances: At one point, Mr. Powell said that it would be appropriate to lower interest rates when the Fed was confident that inflation had come down enough, adding, “and we’re not far from it.”

Mr Powell is going to reiterate the message he has been giving for months that there are risks to cutting rates too early and that leaving rates high for too long.

“We’re trying to use our policies to keep that growth going, and to keep that labor market strong, while also achieving further progress on inflation,” Mr. Powell said during his testimony.

Fed officials have another policy project on their plate in March. They have signaled in recent communications that they will discuss plans for their balance sheet of bond holdings at this meeting. Fed officials have been shrinking their balance sheet by allowing securities to expire without reinvestment, a process that takes a little bit of steam out of markets and the economy.

Recent measures show that prices are still climbing faster than the central bank would like. Since last summer the Fed has kept its interest rates at their highest levels in more than Two decades, in an attempt to tame prices and discourage demand.

Committee members voted unanimously Wednesday to keep their benchmark rate between 5.25 and 5.5%. The committee does not want to cut the target range until it is more confident that inflation is moving in the right direction, according to the Fed.

So far, the economy has weathered high interest rates in relatively good shape. The unemployment rate has remained below 4% for more than two years. Employers have added 265,000 jobs in the last three months.

Higher interest rates have taken a toll on the housing market, however. Sales of existing homes dropped to their lowest level since 1995 last year. According to Freddie Mac, the average interest rate for a 30- year mortgage last week was 6.74%, down from 8.0% a year ago.

Retail sales have also slowed in recent months in a sign that some consumers are struggling with the combination of high prices and high borrowing costs. The Federal Reserve Bank of New York says that credit card debt surpassed $1.1 trillion last year, and that the number of users who are behind on payments has doubled since the economic downturn.