Fed Holds Steady on Rates, Signals Potential Cuts in 2024

Central bank maintains 5.25%-5.50% target range, but indicates rate reductions could come later this year if conditions warrant

Jan. 28, 2026 at 1:15am

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The Federal Reserve's Federal Open Market Committee voted 7-0 on January 24, 2024 to keep the federal funds rate unchanged in a target range of 5.25% to 5.50%, a 22-year high. However, the committee signaled that rate cuts could be appropriate 'at some point this year' if economic conditions warrant.

Why it matters

The Fed's decision to hold steady on interest rates comes as inflation has cooled from its peak in 2022, but remains above the central bank's 2% target. The potential for future rate cuts reflects the Fed's balancing act between taming inflation and supporting economic growth.

The details

The Consumer Price Index rose 3.1% in January 2024, down from a peak of 9.1% in June 2022. The Personal Consumption Expenditures price index, the Fed's preferred inflation measure, increased 2.6% over the year ending December 2023. The unemployment rate remained at 3.7% in January 2024, indicating a tight labor market. In a press conference, Fed Chair Jerome Powell stated that the committee does not believe it is appropriate to cut rates until it has greater confidence that inflation is moving sustainably toward its 2% target.

  • The Federal Reserve's Federal Open Market Committee voted on January 24, 2024 to maintain the federal funds rate.
  • The next FOMC meeting is scheduled for March 19-20, 2024.

The players

Federal Reserve

The central banking system of the United States that conducts monetary policy, supervises banks, maintains financial system stability, and provides banking services.

Jerome Powell

The current Chair of the Board of Governors of the Federal Reserve System, appointed in 2018.

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What they’re saying

“The committee does not believe it is indeed appropriate to cut rates until it has greater confidence that inflation is moving sustainably toward its 2% target.”

— Jerome Powell, Federal Reserve Chair (Press Conference)

What’s next

Analysts at Goldman Sachs predict the Fed will begin cutting rates in June 2024, forecasting a total of 250 basis points of cuts throughout the year.

The takeaway

The Fed's decision to hold steady on interest rates reflects its cautious approach to managing inflation and supporting economic growth. The potential for future rate cuts signals the central bank's willingness to adjust policy as needed to achieve its dual mandate of price stability and maximum employment.