The Federal Reserve signaled Wednesday it would lower interest rates three times this year, consistent with its previous December projection.
Fed officials see the fed funds rate peaking at 4.6% in 2024. That suggests the Fed will cut rates by 0.75%. The Fed has moved in 25-basis-point increments over the last year or so, indicating the central bank expects to cut interest rates three times in 2024.
Seventeen officials predict a rate cut this year while just two see no cut. Notably, only one official sees the Fed cutting rates by more than 0.75% this year, compared to five in December. No officials see rates ticking higher in 2024.
The updated projections suggest the Federal Reserve will maintain a "higher for longer" policy stance as the central bank works to bring inflation back down to its 2% target.
Immediately following the announcement, markets were pricing in a nearly 60% chance the Federal Reserve will begin to cut rates at its June meeting, up from 55% the day prior, according to data from the CME Group.
The central bank left interest rates unchanged in a range of 5.25%-5.5% at its meeting that concluded on Wednesday.
Read more: What the Fed rate decision means for your money
Along with its policy announcement, the Fed released updated economic forecasts in its Summary of Economic Projections (SEP), including its "dot plot," which maps out policymakers' expectations for where interest rates could be headed in the future.
The SEP indicated the Federal Reserve sees core inflation peaking at 2.6% this year — higher than December's projection of 2.4% — before cooling to 2.2% in 2025 and 2.0% in 2026.
Officials see unemployment rising to 4.0% in 2024, lower than the previous forecast of 4.1%. Unemployment is expected to tick higher to 4.1% in 2025 before coming back down to 4.0% in 2026.
The Fed also raised its forecast for US economic growth, with the economy now expected to grow 2.1% this year — up from December's 1.4% projection — before ticking down slightly to 2.0% in 2025 and remaining at that level through 2026.
Stocks popped on the heels of the decision as the 10-year Treasury yield (^TNX) fell about 4 basis points to trade near 4.25%.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at [email protected]
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance