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The Federal Reserve’s first rate meeting is on Wednesday. Here’s what

The Federal Reserve has spent almost two years ratcheting up interest rates to tame inflation — a task that is paying off with steadily cooling price increases. On Wednesday, the central bank will hold its first rate meeting of 2024, prompting questions about when the Fed might privot and begin cutting rates. 

The Federal Reserve has already indicated it expects three rate cuts in 2024, thanks to a slower pace of inflation; some Wall Street economists are predicting the central bank could issue as many as five cuts throughout the year. 

Rate cuts could provide some relief to consumers and businesses, who have been paying more for mortgages, auto loans, credit card debt and other borrowing due to the Fed’s flurry of hikes. But it’s likely that rate-weary Americans will have to wait a few more months to see any relief, given that Wall Street is projecting the Fed will hold rates steady on Wednesday and that the first cut will occur in March instead, according to financial data provider FactSet.

“The Fed is being very cautious as it navigates the potential for future rate cuts,” noted LendingTree Senior Economist Jacob Channel in an email. “While it doesn’t want to leave rates high forever, it also doesn’t want to cut them prematurely and risk inflation spiking again.”

He added, “Owing to this, we’re likely going to see the Fed hold rates steady for a few more months while they wait to get an even clearer picture of how the economy is doing and where it’s likely to be headed.”

When is the Fed meeting this week?

The Federal Reserve’s Open Market Committee (FOMC) is scheduled to meet on January 30-31, with the group set to announce its rate decision at 2 p.m. Eastern time on January 31. 

Chairman Jerome Powell will hold a press conference at 2:30 p.m. on Wednesday to discuss the FOMC’s rate decision and provide information on the central bank’s outlook.

When will the Fed cut interest rates?

Most economists believe the Fed will keep rates steady on Wednesday, holding the federal funds rate in a range of 5.25% to 5.5%, according to FactSet.

About 50% of economists polled by FactSet said they believe the first cut of 2024 will occur at the Fed’s March 19-20 meeting. Roughly nine in 10 economists believe the central bank will issue a rate reduction at its April 30-May 1 meeting, FactSet shows.

Among those predicting that March will provide the first rate relief is Goldman Sachs, with economist David Mericle writing in a January 27 research note that he believes a March 2024 cut will be followed by four additional rate reductions. 

The central bank is likely to be cautious in its language on January 31 and avoid “sending a decisive signal,” he noted. 

The Fed may want to “douse hopes of any early easing in policy,” noted David Kelly, chief global strategist at J.P. Morgan Asset Management, in a Monday research report. “This is, in part, because they are genuinely uncertain about how sticky inflation…

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