Federal
Reserve
officials
in
December
concluded
that
interest
rate
cuts
are
likely
in
2024,
though
they
appeared
to
provide
little
in
the
way
of
when
that
might
occur,
according
to
minutes
from
the
meeting
released
Wednesday.
At
the
meeting,
the
rate-setting
Federal
Open
Market
Committee
agreed
to
hold
its
benchmark
rate
steady
in
a
range
between
5.25%
and
5.5%.
Members
indicated
they
expect
three
quarter-percentage
point
cuts
by
the
end
of
2024.
However,
the
meeting
summary
noted
a
high
level
of
uncertainty
over
how,
or
if,
that
will
happen.
“In
discussing
the
policy
outlook,
participants
viewed
the
policy
rate
as
likely
at
or
near
its
peak
for
this
tightening
cycle,
though
they
noted
that
the
actual
policy
path
will
depend
on
how
the
economy
evolves,”
the
minutes
said.
Officials
noted
the
progress
that
has
been
made
in
the
battle
to
bring
down
inflation.
They
said
supply
chain
factors
that
contributed
substantially
to
a
surge
that
peaked
in
mid-2022
appear
to
have
eased.
In
addition,
they
cited
progress
in
bringing
the
labor
market
better
into
balance,
though
that
also
is
a
work
in
progress.
The
“dot
plot”
of
individual
members’
expectations
released
following
the
meeting
showed
that
participants
expect
cuts
over
the
coming
three
years
to
bring
the
overnight
borrowing
rate
back
down
near
the
long-run
range
of
2%.
“In
their
submitted
projections,
almost
all
participants
indicated
that,
reflecting
the
improvements
in
their
inflation
outlooks,
their
baseline
projections
implied
that
a
lower
target
range
for
the
federal
funds
rate
would
be
appropriate
by
the
end
of
2024,”
the
document
said.
However,
the
minutes
noted
an
“unusually
elevated
degree
of
uncertainty”
about
the
policy
path.
Several
members
said
it
might
be
necessary
to
keep
the
funds
rate
at
an
elevated
level
if
inflation
doesn’t
cooperate,
and
others
noted
the
potential
for
additional
hikes
depending
on
how
conditions
evolve.
“Participants
generally
stressed
the
importance
of
maintaining
a
careful
and
data-dependent
approach
to
making
monetary
policy
decisions
and
reaffirmed
that
it
would
be
appropriate
for
policy
to
remain
at
a
restrictive
stance
for
some
time
until
inflation
was
clearly
moving
down
sustainably
toward
the
Committee’s
objective,”
the
minutes
stated.
Despite
the
cautionary
tone
from
Fed
officials,
markets
expect
the
central
bank
to
cut
aggressively
in
2024.
Fed
funds
futures
trading
points
to
six
quarter-point
cuts
this
year,
which
would
take
the
fed
funds
rate,
which
primarily
sets
what
banks
charge
each
other
for
overnight
loans
but
also
influences
multiple
consumer
debt
products,
down
to
a
range
between
3.75%-4%.
Earlier
Wednesday,
Richmond
Fed
President
Thomas
Barkin
also
expressed
caution
about
policy,
noting
the
number
of
risks
inherent
in
trying
to
guide
the
economy
to
a
soft
landing.
The
minutes
indicated
that
“clear
progress”
had
been
made
against
inflation,
with
a
six-month
measure
of
personal
consumption
expenditures
even
indicating
that
the
inflation
rate
has
edged
below
the
Fed’s
2%
target.
However,
the
document
also
noted
that
progress
has
been
“uneven”
across
sectors,
with
energy
and
core
goods
moving
lower
but
core
services
still
moving
higher.
Officials
also
addressed
the
Fed’s
effort
to
reduce
the
bond
holdings
on
its
balance
sheet.
The
central
bank
has
shaved
about
$1.2
trillion
by
allowing
maturing
proceeds
to
roll
off
rather
than
reinvesting
them
as
usual.
Several
FOMC
members
said
it
likely
would
be
appropriate
to
wind
down
the
process
when
bank
reserves
“are
somewhat
above
the
level
judged
consistent
with
ample.”
Those
officials
said
discussions
would
begin
well
in
advance
of
stopping
the
process
so
the
public
had
plenty
of
notice.
Don’t
miss
these
stories
from
CNBC
PRO:
