In a widely expected move, the Fed voted to leave the federal funds rate unchanged between 3.50% and 3.75%. Fed Governor Stephen Miran voted in favor of a 25 bps reduction, while the 11 other committee members voted to maintain the rate.
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Trade QQQ with leverageThe central bank’s decision came in line with CME’s FedWatch tool, which assigned a 98.9% probability that rates would remain steady and 1.1% odds of a 25 bps rate hike.
Fed Boosts GDP, Inflation Projections
In a press release, the central bank noted that while job gains have remained low and inflation has remained “somewhat elevated,” the economy has expanded at a “solid pace.” In addition, the Fed is actively monitoring geopolitical developments in the Middle East and is still uncertain about its economic impact.
Furthermore, the Fed now expects gross domestic product (GDP) growth of 2.4% this year, up from its December estimate of 2.3%. At the same time, it predicts core personal consumption expenditures (PCE) inflation of 2.7%, up from 2.5% and still well above the target of 2%. As for the rate path outlook, the Fed projects a single 25 bps reduction this year and another in 2027.