Slower progress on inflation means the Federal Reserve will reduce rates more slowly, expecting only two quarter-point cuts by the end of 2025, as inflation remains elevated.
Fed Chair Jerome Powell emphasized that the risks are now balanced, noting that maintaining rates is crucial given that inflation is not expected to hit the target until 2027.
The overall estimated long-run neutral rate of interest has increased, indicating the Fed's view of a tighter monetary environment due to ongoing inflation concerns.
The Committee’s cautious stance on future rate cuts reflects a solid economic activity backdrop, with low unemployment and projected inflation above their 2 percent target.
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