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Fed sees three rate cuts in 2024 but a more shallow easing path


WASHINGTON, March 20 (Reuters) – Federal Reserve Chair Jerome Powell said on Wednesday recent high inflation readings had not changed the underlying “story” of slowly easing price pressures in the U.S. as the central bank stayed on track for three interest rate cuts this year and affirmed that solid economic growth will continue.
The Fed also left interest rates unchanged and released new quarterly economic projections that showed officials now expect the economy to grow 2.1% this year, above what’s considered the U.S. economy’s long-run potential and a substantial upgrade from the 1.4% growth seen as of December. At the same time, the unemployment rate is only expected to hit 4% by the end of 2024, barely changed from the current 3.9% level, while a key measure of inflation is projected to keep falling, though at a somewhat slower pace, to end the year at 2.6%.

In the context of declining interest rates, the projections showed the Fed still foresees a so-called “soft landing” from the post-pandemic spike of inflation to a 40-year high, though Powell said recent data had kept officials on a cautious footing to ensure price pressures do continue to ease.
Speaking after a policy meeting at which officials left the benchmark overnight interest rate in the 5.25%-5.50% range and held onto their outlook for three cuts in borrowing costs this year, Powell said the timing of those reductions still depends on officials becoming more secure that inflation will continue to decline towards the Fed’s 2% target even as the economy continues to outperform expectations.

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