At the December 2024 Federal Open Market Committee (FOMC) meeting, the Federal Reserve (Fed) lowered interest rates by 25 basis points. This lowers the target interest rate range to 4.25% to 4.5% and reflects the Fed's ongoing commitment to achieving its dual goals of maximum employment and price stability.
The FOMC forecasts economic growth for 2023 to hit 2.6%, slightly higher than its September projections that real gross domestic product would grow 2.1% this year.
Once each meeting concludes, the FOMC releases its policy decisions at 2 p.m. Eastern time.
Consistent with the Committee's decision to leave the target range for the federal funds rate unchanged, the Board of Governors of the Federal Reserve System voted unanimously to maintain the interest rate paid on reserve balances at 5.4 percent, effective December 14, 2023.
Interest Rate in the United States is expected to be 4.50 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. In the long-term, the United States Fed Funds Interest Rate is projected to trend around 3.50 percent in 2026, according to our econometric models.
Introduction to the FOMC (Federal Open Market Committee)
The Federal Open Market Committee, or FOMC, is the Fed's chief body for monetary policy.
So how much did interest rates go up by in 2023? The total rate increase for 2023 was 1.25% per annum, with the RBA deciding to increase the cash rate by 0.25% per annum in February, March, May, June and November (no changes announced in January, April, July, August, September, October and December).
Effective Federal Funds Rate is at 4.33%, compared to 4.33% the previous market day and 5.33% last year.
"As reasons for this judgment, participants cited recent stronger-than-expected readings on inflation and the likely effects of potential changes in trade and immigration policy." FOMC members voted to lower the central bank's benchmark borrowing rate to a target range of 4.25%-4.5%.
The current Bank of America, N.A. prime rate is 7.50% (rate effective as of December 19, 2024).
The Federal Reserve announced a quarter-point cut to its key interest rate Wednesday, an effort to keep what appears to be a steady but cooling economy stable. The move, the Fed's third rate cut of the year, reduces the central bank's target rate to between 4.25% and 4.5%.
Short-term interest rates are expected to end 2025 close to 4%. That's down from the current 4.25% to 4.5% range as of January 2025. This is after the Fed cut rates in December 2024.
The current rate now sits between 4.25% and 4.5%—down from the 5.25%-5.5% range maintained from mid-2023 to late 2024. On Dec. 18th, Jerome Powell indicated more cuts are likely, with the target federal funds rate expected to drop to 3.9% by late 2025. However, inflation continues to hover above the Fed's 2% target.
Our latest economic forecast for interest rates, inflation, and GDP growth. Wondering what's in store for interest rates? From July 2023 to September 2024, the Federal Reserve kept the federal-funds rate at a target range of 5.25% to 5.50%, far above the near-zero levels averaged since the 2008 financial crisis.
The Federal Open Market Committee
These meetings take place every six weeks. Four of these meetings feature a Summary of Economic Projections (SEP) followed with a press conference by the chair. The minutes of the scheduled meetings are released three weeks after the date of the policy decision.
FOMC minutes are a detailed record of the Federal Open Market Committee (FOMC) meetings and are released three weeks after every meeting.
Fed officials indicated they now expect to cut rates by just a half point in 2025, which would likely mean two rate cuts at their eight policy-setting meetings. That's down from predicting a full percentage point (or four quarter-point cuts) in their September projections.
At its February 2024 meeting, the Reserve Bank Board decided to leave the cash rate target unchanged at 4.35 per cent. This decision supports progress of inflation to the midpoint of the 2–3 per cent target range within a reasonable timeframe and continued moderate growth in employment.
The Federal Reserve on Wednesday announced its third consecutive interest rate cut of 2024, reducing its benchmark rate by 0.25 percentage points amid cooling inflation. Yet in a blow for borrowers, the central bank also projected that it will loosen rates less next year than previously expected.