Federal Reserve Signals Interest Rates May Be at Peak; Soft Landing for US Economy More Likely

Officials expect three quarter-point rate cuts this year, but the timing and pace remain uncertain as they monitor inflation trends.

Federal Reserve officials signaled in their December meeting that interest rates might be at their peak, even as they left the door open to future rate increases.
The Fed raised interest rates rapidly starting in March 2022, which pushed interest rates to their highest level in 22 years, but inflation has cooled sharply since mid-2023.
Federal Reserve Bank of Richmond President Thomas Barkin said a soft landing for the US economy is looking more likely but hardly certain, noting he’d need more conviction about the path of inflation before supporting a rate cut.
Officials kept rates unchanged for a third straight meeting last month and signaled they expect three quarter-point rate cuts this year, according to the median forecast released after the policy meeting.
Several Fed officials, including New York Fed president John Williams, have tried to tamp down expectations for steep reductions in early 2024.