Fed meeting minutes indicate interest rate cuts could be coming in 2024

Fed officials eyeing rate cuts this year amid cooling inflation

Federal Reserve officials agreed during their December policy-setting meeting that interest rates are likely at their peak amid recent declines in inflation – and that rate reductions may be warranted in 2024.

Minutes from the U.S. central bank's Dec. 12-13 meeting released Wednesday showed that officials are mostly optimistic about the path of inflation, and expect to begin reducing rates sometime this year.

"In discussing the policy outlook, participants viewed the policy rate as likely at or near its peak for this tightening cycle, though they noted that the actual policy path will depend on how the economy evolves," the meeting minutes said.


Fed Chairman Jerome Powell

Federal Reserve Chair Jerome Powell attends a news conference in Washington, D.C., on Sept. 21, 2022. (Chen Mengtong/China News Service via / Getty Images)

Officials voted at the December meeting to hold interest rates steady at a range of 5.25% to 5.5%, the highest level since 2001. But policymakers also opened the door to multiple rate cuts in 2024 amid signs the economy is beginning to slow in the face of tighter monetary policy.

Updated quarterly economic projections laid out after the meeting showed that a majority of Fed officials who participated in the meeting expect rates to fall to 4.6% by the end of 2024, suggesting there will be at least three quarter-point rate cuts next year. 

Policymakers also penciled in additional rate cuts in 2025 and 2026. 

No officials see rates rising further this year.

The Federal Reserve building in Washington

A pedestrian passes the Federal Reserve building in Washington, D.C., on June 3, 2023. (Nathan Howard/Bloomberg / Getty Images)

"We added the word ‘any’ as an acknowledgment that we are likely at, or near, the peak rate for this cycle," Fed Chair Jerome Powell told reporters at the post-meeting press conference in Washington, D.C. "But participants also didn't want to take the possibility of further hikes off the table."

However, the meeting minutes painted a high degree of uncertainty as to when rate cuts could finally happen. Inflation has fallen considerably from a peak of 9.1%, but it remains above the Fed's 2% target. 


"In their submitted projections, almost all participants indicated that, reflecting the improvements in their inflation outlooks, their baseline projections implied that a lower target range for the federal funds rate would be appropriate by the end of 2024," the minutes said.

The document also noted an "unusually elevated degree of uncertainty" regarding the future path of interest rates.

Hiking interest rates tends to create higher rates on consumer and business loans, which then slows the economy by forcing employers to cut back on spending. Higher rates have helped push the average rate on 30-year mortgages above 7% for the first time in years. Borrowing costs for everything from home equity lines of credit, auto loans and credit cards have also spiked.