Fed Likely to Cut Interest Rates in 2024, Timing Uncertain

Market Anticipates Seven Quarter-Point Rate Decreases, Fed Governor Advocates for Methodical Approach

Federal Reserve Governor Christopher Waller has indicated that interest rate cuts are likely this year, but the central bank can take its time relaxing monetary policy.
Market pricing indicates about a 71% chance the Federal Open Market Committee (FOMC) will begin cutting in March, with traders anticipating a total of seven quarter-percentage point rate decreases by the end of the year.
Waller stated that as long as inflation doesn't rebound and stay elevated, the FOMC will be able to lower the target range for the federal funds rate this year.
Inflation topped 9% in June 2022, well above the Fed’s target level, but has fallen steadily since and clocked in at an annual rate of 3.4% in December.
Waller suggested that the Fed should lower interest rates as inflation falls, to keep the real policy rate at an appropriate level of tightness.