Fed Holds Rates Steady Amid Elevated Inflation Outlook

The Federal Reserve maintained interest rates unchanged for the fourth consecutive meeting, signaling cautious Optimism despite revising inflation projections upward. Policymakers retained their forecast for two rate cuts in 2024, though Chair Jerome Powell emphasized the uncertainty surrounding timing. "No one holds these rate paths with a great deal of conviction," Powell remarked during Wednesday's press conference, downplaying the significance of the quarterly "dot plot" projections.

Central bankers now anticipate the PCE price index—the Fed's preferred inflation gauge—to reach 3% this year, up from March's 2.7% projection. The committee adjusted unemployment expectations to 4.5% and trimmed GDP growth forecasts to 1.4%. Powell stressed the Fed's data-dependent approach: "As long as we see reasonable growth with inflation moving down, maintaining our current stance remains appropriate."