WASHINGTON--The Federal Reserve Wednesday kept its benchmark federal funds rate at approximately 4.3% and revised its 2024 GDP growth forecast to 1.7%, down from December's 2.1% projection.
The Fed, in a statement, said recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated.
"In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2%," the Fed stated. "In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. Beginning in April, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25 billion to $5 billion. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
"In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments," the Fed added.
ACU Analysis
"The FOMC held the federal funds rate steady but downgraded its outlook for economic growth this year and acknowledged greater downside risk to that outlook than in December," said Curt Long, America's Credit Unions deputy chief economist. "The Committee’s median member continues to expect two rate cuts in 2025 despite a higher forecast for inflation, which suggests a willingness to look through a modest rise in price growth as being a one-off effect of tariffs. Should the economy weaken, credit unions will be a critical partner for the members and local communities they serve."