Fed to Maintain Interest Rates at March FOMC Meeting

Everyone's looking at the Federal Reserve's next move as its Federal Open Market Committee (FOMC) meeting comes up.

by Faruk Imamovic
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Fed to Maintain Interest Rates at March FOMC Meeting
© Getty Images/Chip Somodevilla

Everyone's looking at the Federal Reserve's next move as its Federal Open Market Committee (FOMC) meeting comes up. People are buzzing with guesses and questions, mainly about if the Fed will change the fed funds rate, which tells us a lot about where the country's economy might be heading.

Lately, the economic numbers have been a bit unexpected, making this particular meeting even more important than usual.

What's Happening with Interest Rates?

Most experts think the FOMC will keep the interest rates just as they are for now.

They don't see the Fed making big changes to what they say about how the economy's doing, the job market, or inflation. But, when the Fed shares its economic predictions - something people really pay attention to - it might hint that it's leaning towards not cutting rates as much in 2024 or even talk about increasing the ideal long-term interest rates a bit.

These thoughts go hand in hand with the latest economic forecasts for the U.S., suggesting we might see higher interest rates down the road. Everyone's waiting to hear from Jerome Powell, the Fed's chair, especially about how he sees the recent rise in inflation each month and what he thinks needs to happen before they think about lowering rates.

Right now, many economists are betting on a small rate cut in July, but they're also saying don't be surprised if things change and it happens later, depending on how the economy looks.

Key Areas to Watch

Several areas of the FOMC's announcement will be under the microscope:

  • Statement Language: Despite recent inflation surprises, major changes in the Fed's description of inflation are not anticipated.
  • Growth and Inflation Forecasts: Expectations lean towards upward revisions for 2024's core PCE and real GDP estimates, with the unemployment rate forecast remaining stable.
  • Rate Projections and Policy Path: The focus will be on the adjustments to the number of cuts projected for 2024 and the path outlined for 2025 and 2026.

    The December median rate projections hinted at a gradual reduction of rates, indicating a cautious but optimistic outlook.

  • Neutral Rate Adjustments: With the resilience of growth against higher interest rates, there's speculation about an upward revision of the neutral rate, which has remained a point of debate among policymakers.
  • Balance Sheet Policy: While no significant changes are expected, any commentary from Chair Powell regarding future plans will be scrutinized for hints on the Fed's strategy towards its balance sheet policy.

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