📊 Fed holds interest rates and adjusts forecasts! 📉

The S&P500 responds immediately, erasing gains of more than 0.50%!

The Federal Reserve has decided to keep interest rates at their highest level in 23years. 🔒 Rates remain in a range 5,25-5,50 % This move comes with a change in the Fed' s forecast for 2024, where it now expects only one rate cut instead of the originally planned three. 🔮

Session Fed meeting revealed a close decision on expectations for this year. Eight officials expect two cuts, seven only one and four none. On the other hand, the outlook for the year 2025 has been changed to four cuts from the three originally expected, so let's see if we see more cuts next year! 📅

Inflation is still a major topic of discussion. The forecast for 2024 now puts inflation as measured by the core Personal Consumption Expenditure Index (PCE) at 2,8 % compared to earlier 2,6 %.

FedChairman , Jerome Powell, expressed mild optimism in the change in language of theFed statement , stating that there has been "modest progress" toward the inflation target 2 %. However, this progress needs to be confirmed before a rate cut can be made.

The new forecasts, show a consensus on three cuts in 2024. This forecast has been revised up following the high inflation data in the first quarter.

The latest data show that inflation remained at 2,8 % year-on-year, suggesting some stabilisation after elevated readings in the first quarter. The consumer price index (CPI) rose in May by 3,3 % from a year earlier, a slight slowdown from April's 3,4 %.

Powell stressed that theFed needs more than quarterly data to assess whether inflation is steadily declining toward 2% target. The odds of a first rate cut in September have increased, but depend on further inflation reports.

TheFed'sforecasts include a steady unemployment rate at 4 % and GDP growth at 2,1 % for this year. The neutral rate outlook has been raised to 2,8 % from the previous 2,6 %. 🌐

What's your take on the Fed's decision, and when do you personally expect the first rate cut?
How do you think the market would currently react to a rate cut?

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