The Federal Reserve is expected to cut interest rates at most once this year

The US Federal Reserve Board ended a two-day monetary policy meeting on the 12th, announcing that the target range of the federal funds rate remained unchanged at 5.25% to 5.5%. Most FOMC members expect at most one rate cut this year.

It was the seventh consecutive meeting since September that the Fed kept rates unchanged, Xinhua reported. In a statement, the Fed said economic activity continued to expand at a solid pace, job growth remained strong, and inflation had eased over the past year but remained elevated.

In recent months, prices in the United States "have made modest further progress" toward the Fed's longer-run goal of 2 percent, the statement said. The wording was a marked change from the "lack of further progress" in previous statements.

The statement reiterated that the risks to achieving the twin objectives of full employment and price stability "have become better balanced" over the past year. It would be "inappropriate" for the Fed to lower the target range for the federal funds rate until there is greater confidence that inflation is moving consistently toward its 2 percent longer-run objective. In assessing the appropriate stance of monetary policy, the Federal Reserve will continue to monitor the impact of incoming information on the economic outlook. The Federal Reserve would be prepared to adjust the stance of monetary policy as appropriate if risks arose that could impede achievement of its objectives.

The Fed also released the latest economic outlook on the same day. Compared with March, the Fed maintained its forecast for growth of 2.1 per cent this year and 2 per cent next. The unemployment rate is expected to be 4% this year and 4.2% next year. Meanwhile, inflation as measured by the personal consumption expenditures price index is expected to be 2.6 percent this year, and core inflation, excluding food and energy prices, is expected to be 2.8 percent, both up 0.2 percentage points.

Based on the economic outlook, the median forecast for the target range for the federal funds rate by the end of this year among the 19 FOMC members was between 4.9% and 5.4%. Eleven members said they expected the Fed to cut rates at most once this year, while eight expected the Fed to cut rates twice this year. Most officials expect the Fed to cut rates as many as five times by the end of 2025.

At the press conference held after the meeting, Fed Chairman Powell said that although the recent inflation data was more favorable than at the beginning of the year and the inflation target set by the Fed has made modest further progress, the data so far do not give the Fed greater confidence to adjust the stance of monetary policy. The Fed needs to see more good data showing that inflation is moving toward 2% on a sustained basis.