When It Is in June and What To Expect

The next Federal Open Market Committee (FOMC) meeting will be held on June 11-12, 2024. This is one of the key dates that investors, economists, and policymakers mark on their calendars. Many experts expect the Fed to hold rates steady at a target of 5.25%-5.50%, as the Fed still waits for inflation to ease a bit more.

The FOMC serves as the monetary policy-making arm of the Federal Reserve System, and its decisions have far-reaching implications for the U.S. economy. Meeting eight times a year, and occasionally more if the situation demands, the FOMC deliberates on the nation’s interest rates and other financial policies. These decisions influence everything from the rates you get on your savings account to the cost of borrowing for homes and businesses. So, when the FOMC speaks, people listen.

The Latest Fed Moves

During the most recent FOMC meeting held on April 30 – May 1, 2024, interest rates were kept unchanged at 5.25%-5.50%. This was quite expected, as it gives the Fed additional time to evaluate if the current rates keep inflation at bay without hampering economic growth too much. However, the tone of the last meeting’s minutes took a bit of a hawkish tone, which stated, “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.” This is a change in language from the meetings held in late 2023, where the FOMC signaled that at least three rate cuts could be in the cards for 2024. Indeed, the Fed has indicated that inflation remains a key concern, and government reports show the pace of inflation remains stubbornly high. Market expectations going into the May meeting were, therefore, somewhat muted that the Fed would cut.

During the 2022-2023 cycle, the Fed increased rates 11 times to slow inflation but has held rates steady at 5.25%-5.50% since July 2023. Indeed, after the September 2023 meeting, Fed Chairman Jerome Powell had hinted that one more hike before 2023 was still on the cards. That, however, did not come to pass as the Fed’s aggressive rate hiking campaign in 2022-’23 seemed to have already done the job. Whether that sticks remains to be seen.

Still, Powell reiterated that no decisions about the future have been made, and the Fed will continue to take it meeting by meeting and that he would be willing to hold rates steady for as long as is needed.

What Happens at Fed Meetings?

The Federal Open Market Committee (FOMC) is the monetary policy-making body of the Federal Reserve System, the central bank of the United States. The FOMC holds eight regularly scheduled meetings during the year and may hold other meetings as needed to set emergency short-term interest rates or implement other policy tools.

The FOMC consists of 12 members: the seven members of the Board of Governors of the Federal Reserve System, the president of the Federal Reserve Bank of New York, and four of the remaining 11 Reserve Bank presidents, who serve one-year terms on a rotating basis. At each FOMC meeting, the members review economic and financial conditions, determine the appropriate stance of monetary policy, and assess the risks to its long-term goals of price stability and sustainable economic growth.

The FOMC issues a statement after each meeting that summarizes its assessment of the economy and its policy decisions. The statement also includes an implementation note that provides operational details on how the policy decision will be carried out. The FOMC also publishes its Summary of Economic Projections (SEP) four times a year, showing the members’ forecasts for key economic variables over the next three years and their views on the appropriate path of the federal funds rate.

The FOMC meetings are closed to the public but are recorded and transcribed. The minutes of each meeting are released three weeks after the date of the policy decision. The transcripts are released with a five-year lag.

Next Fed Meeting: What to Expect in June

The Federal Reserve will hold its next policy meeting on June 11-12, 2024, and many analysts and investors expect the central bank to continue to hold rates steady. However, the Fed also faces risks, as persistent high-interest rates can negatively affect the banking sector, stock market, and trade. These factors could weigh on its next rate decision; and so futures markets pointed to a better than 50/50 chance that the FOMC will reverse course late in 2024 and begin cutting rates as soon as the summer, according to the CME’s FedWatch Tool. Indeed, both analysts and futures markets point to rate cuts by the Fall, but a more than 85% chance of remaining unchanged again in June.

This, of course, will all depend on the trajectory of inflation and the state of the economy. The Fed’s policy moves ultimately depend on what economic data show in the coming weeks, including measures of inflation, employment, and productivity. The Fed also will monitor credit conditions, the financial markets, and global developments closely.

The Fed’s goal is to achieve a soft landing for the U.S. economy while balancing its dual mandate of maximum employment and price stability. The Fed’s decision and statement will have important implications for investors, as they affect the cost of borrowing, the value of markets and assets, and the direction of the U.S. dollar.

Most Recent Fed Meeting (April 30 – May 1, 2024)

During the latest FOMC meeting decision, released on May 1, 2024, the Fed again held rates steady at 5.25-5.50%, continuing a pause from an aggressive rate-hiking campaign that began in March 2022 to fight rising inflation. The Fed also signaled that it was willing to keep rates steady until it sees inflation moderating toward the 2% target. However, Fed Chair Powell had stated back in December that several rate cuts could be seen later this year. Still, the Fed has indicated that it will proceed carefully as it monitors the economy and continues to unwind its balance sheet to reduce its holdings of treasuries, agency debt, and mortgage-backed securities (MBS). However, the Fed did signal it would slow down its balance sheet reduction from $60 billion to $25 billion per month–a somewhat hawkish signal.

The market widely expected the Fed’s decision to hold rates steady following a series of rate hikes that culminated in July, 2023, which followed another decision to hold rates steady in June, as the Fed left the door open to resuming rate hikes again if inflation didn’t moderate. The Fed had raised rates almost a dozen times since early 2022-’23 in an attempt to cool the U.S. economy and battle inflation rates that peaked at more than 9% last year. The Fed’s rate-hiking campaign has been the most aggressive since the 1980s, and it sparked some turmoil in the banking sector, the stock market, and the global economy during this period. However, rates at around 5.50% are still less than half of their 1980s peak.

The Fed reported that the American economy remains strong and the labor market resilient–but also acknowledged that the pace of growth had slowed down compared to 2023. This, of course, despite record highs in the markets. Experts expect the Fed to continue to hold rates steady through the beginning of the year before making cuts, barring any sudden macroeconomic events.

The Fed, as usual, reaffirmed its commitment to achieving its dual mandate of maximum employment and price stability and said that it will act as appropriate to sustain the expansion. The Fed’s policy moves depend on what economic indicators point to for the coming weeks and months, including the Consumer Price Index (CPI), payrolls, and gross domestic product (GDP) growth.

Fed Meeting Calendar

The FOMC meets regularly eight times a year. The table below shows the calendar from December 2022 thru 2024, and how the Fed decided on interest rate hikes.