The Federal Reserve held the federal funds rate in the 5.25% to 5.50% range at this week's Federal Open Market Committee meeting, but reiterated that it expects a total of 0.75% in rate cuts by 2024. This stance toward cuts was seen as cautious by the market as both GDP and core inflation estimates were revised upward for this year. Despite the three 25 basis point rate cuts planned for this year, longer-term projections showed a slower pace of cuts going forward, as Fed Chairman Jerome Powell indicated that the path back to 2% inflation is likely to be bumpy. The Fed made no decisions on the balance sheet, but communicated that it will likely slow the pace of balance sheet reduction soon.
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