What to expect from the Fed meeting

The Federal Reserve is expected to keep interest rates at a 23-year high for the seventh consecutive meeting on Wednesday and signal that it will cut rates this year fewer times than previously thought.

The Federal Reserve is expected to keep interest rates at a 23-year high for the seventh consecutive meeting on Wednesday and signal that it will cut rates this year fewer times than previously thought. Investors and other market observers will be paying close attention to Fed officials’ latest economic forecasts — known as the “dot plot.” Economists are widely expecting officials to pencil in one or two rate cuts this year, instead of the three they forecast in March. Their projections for inflation will also be an important clue for the timing of the first rate cut. Inflation’s slowdown stalled in the first three months of the year, crushing Wall Street’s hope that the Fed could cut rates aggressively in 2024, but then economic data showed that inflation moderated again in April. Fed policymakers need to be assured that inflation has cooled enough and is expected to moderate further before cutting rates. The Labor Department releases its Consumer Price Index for May at 8:30 am ET Wednesday. Fed Chair Jerome Powell’s remarks during his post-meeting news conference could also provide some hints on what to expect from the central bank in upcoming policy meetings. The Fed chief will likely double down on officials’ current strategy of waiting patiently for more data proving that inflation is headed toward their 2% target before they begin to lower borrowing costs. A solid job market, as reflected in the latest employment figures, is helping the Fed sit tight. The Fed holding off on cutting rates is in marked contrast with other central banks that have already begun to lower borrowing costs, such as the European Central Bank and the Bank of Canada. Wall Street’s best bet for the first rate cut is currently September, according to futures.