Federal Reserve:Meetings/2024 March 20

Results:

The fed kept its target range for the federal funds rate steady at 5.25%-5.50%, as expected.
They still expect three quarter percentage point rate cuts this year despite inflation persiting. However, they forecasted one fewer cut in 2025.
They raised their 2024 projections for GDP and core PCE inflation to 2.1% and 2.6% from 1.4% and 2.4%, respectively.
Their post-meeting statement was identical to the one released on January except for a change on its job growth assessment to “strong” from “moderate”.

Notes from Powell:

Powell was not able to give a good answer when asked if they are willing to tolerate higher inflation due to their projections. Only said growth and inflation were revised due to recent data, but did not say anything why rates were then unchanged for 2024.
They continue to see risks more balanced now between unemployment and inflation.
Dont think the history that inflation is coming gradually down to 2% has changed from the last 2 months’ inflation hotter data, it just signals the route could more “bumpy”. However, they still don’t know if these two months were only a bump, or if its something more. (So, basically they don’t know anything)
He dont see rates coming back down to the very low levels seem before COVID, but he thinks it is still highly uncertain to know for sure when the neutral rate will settle
The confidence to ease will be dependent on incoming data. Base effects from last year are low, so it could be it takes longer.
They still see a very strong labor market, and dont see any of the cracks analysts sometimes mention.
According to Powell, QT tapering could be coming fairly soon. Their view is that this could allow them to keep QT for longer, so not necessarily that dovish.The banking system’s liquidity health and reserves will play a significant role in this, they want to slow QT to avoid a liquidity event.