Fed cuts federal funds rate by 50 bps to 4.75-5.00% today. While the decision was not unanimous, only Fed Governor Michelle Bowman dissented and voted for a 25bps cut.
Fed acknowledged that job gains have “slowed” while unemployment rate has “moved up”. At the same time, inflation has made “further progress” towards 2% target. In considering further adjustments, Fed will “carefully assess incoming data, the evolving outlook, and the balance of risks”.
In the new median economic projections, interest rate will fall to 4.4% by the end of 2024 (versus prior 5.1%, implying 50bps more rate cut), 3.4% by the end of 2025 (versus prior 4.1%), and then 2.9% by the end of 2026 (versus prior 3.1%). That is Fed is seeing a much faster rate cut this year, but the same pace in 2025. The longer run rate was revised slightly up from 2.8% to 2.9%. 
In the new dot plot, 9 members penciled in fed funds rate to be at 4.50-4.75 or above by the end of the year. 10 members see interesting rates at 4.25-4.50% and below. So it’s a pretty tight split. November FOMC meeting would be live.
