US FOMC Meeting (11 - 12 June) - 13 June 2024

Staying the course: Fed foresees only one rate cut this year, projects slightly higher inflation

In line with expectations, the US Federal Open Market Committee (FOMC) unanimously decided to maintain its policy rate at 5.25%-5.50%, marking the seventh consecutive meeting without a change. However, it revised its inflation projections upward and reduced the likelihood of a rate cut to just one potential reduction in 2024.

Fed speak: The committee adopted a slightly dovish tone, adjusting its stance on inflation from "a lack of progress" to acknowledging "modest further progress" toward the 2.0% target. This shift was influenced by a surprising lower-than-expected 0.2% MoM core CPI reading just before the decision. As such, we reckon that further weakness in key data could increase the likelihood of the Fed implementing more than just one rate cut this year