The Federal Open Market Committee (FOMC) did not announce any federal fund rate cuts at its June meeting, which concluded Wednesday afternoon. Read here to learn more.
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The Federal Open Market Committee (FOMC) did not announce any federal fund rate cuts at its June meeting, which concluded Wednesday afternoon.
The decision to keep interest rates in the 5.25%-to-5.5% range was expected — even though the Consumer Price Index (CPI) report for May showed inflation rates dropping more than expected. Rates have been in that range since July 2023,
The inflation rate dropped to 3.3% in May, when it was expected to stay at 3.4%. Core inflation, which excludes food and energy prices, fell to 3.4%, also its lowest level since April 2021.
May was the second month in a row in which inflation rates as measured by the CPI fell. While it was not enough to get the FOMC to budge on the federal funds rate, the fact that it trended lower for two straight months indicates it’s heading in the right direction.
The FOMC also released its quarterly summary of projections (SEP) or dot plot, which shows the consensus is now at only one interest-rate cut this year. Analysts had projected that the Fed would cut rates twice, so this was a bit of a disappointment.
In March, the consensus was calling for three rate cuts.
The FOMC’s statement said the committee “does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%. In addition, the committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities.
