Fed meeting: Dow higher as policymakers still see 3 rate cuts in 2024
Today’s Federal Reserve meeting has kept investors on edge as policymakers continue to project three rate cuts in 2024. The ‘dot plot,’ a set of projections from individual Fed policy makers, is drawing significant attention as it reveals their expectations for the future. The dot plot, part of the Fed’s Summary of Economic Projections, is updated quarterly and is expected to be released today along with the Fed’s policy statement.
With the central bank likely to maintain current interest rates and Fed Chair Jerome Powell expected to keep his options open, all eyes are on the dot plot to gauge if policy makers still anticipate the fed-funds rate to decrease by 75 basis points by the end of the year, equivalent to three quarter-point cuts. Alternatively, a shift in expectations could result in a forecast that scales back these rate cut projections. A mere change in the expectations of two policy makers could lead to the dot plot showing only two instead of three rate cuts this year. This adjustment could potentially impact short-term U.S. rates and the strength of the dollar, influencing market dynamics.
Markets currently price only 70 basis points of Fed rate cuts this year. Therefore, a revision to just two expected cuts would likely prompt higher short-term U.S. rates and a moderately stronger dollar.
The outcome of the Federal Reserve meeting is anticipated to have a significant impact on market movements and investor sentiment. Stay tuned for updates as the meeting progresses.
