The Federal Reserve headquarters in Washington, D.C. (Source: Getty Images)
The Federal Open Market Committee (FOMC) concluded its June 2024 meeting with a decision to keep interest rates unchanged at 5.25%-5.50%, marking the seventh consecutive pause in rate hikes. The move comes as inflation remains stubbornly above the Fed’s 2% target, despite signs of cooling economic growth.
## Key Takeaways from the June FOMC Meeting
### 1. Interest Rates Unchanged, but Future Cuts Uncertain
The Fed maintained its benchmark rate, citing the need for "greater confidence" that inflation is moving sustainably toward 2%. However, the latest "dot plot" projections showed that officials now anticipate only one rate cut in 2024, down from three previously forecasted.
FOMC members' interest rate projections (June 2024 vs. March 2024)
### 2. Inflation Progress Slower Than Expected
While Core PCE inflation has eased from its peak, recent months have shown less progress than hoped. Chair Jerome Powell acknowledged that "the disinflation process is taking longer than expected."
Year-over-year inflation trends (Source: U.S. Bureau of Labor Statistics)
### 3. Strong Labor Market Supports Fed’s Cautious Stance
The U.S. economy added 272,000 jobs in May, far exceeding expectations. This strong labor market gives the Fed room to hold rates higher for longer without immediate fear of a downturn. 
## Market Reaction
- Stocks dipped slightly after the announcement, with the S&P 500 falling 0.5%.
- Treasury yields rose, with the 10-year note climbing to 4.35%.
- The U.S. dollar strengthened against major currencies.
S&P 500 and Treasury yields after the Fed decision (Source: Bloomberg)
## What’s Next?
The Fed’s next meeting in July 2024 will be closely watched for any hints on rate cuts later this year. For now, policymakers remain data-dependent, focusing on inflation, employment, and economic growth trends.
Fed Chair Jerome Powell addresses reporters after the FOMC meeting
### Bottom Line
The Fed is playing it safe, balancing inflation risks against economic growth. Investors should expect continued volatility until clearer signs of inflation control emerge.
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