At the end of 2023, many economists and bankers predicted the Federal Reserve would cut interest rates several times over the course of 2024, leading to lower mortgage and credit card rates, and greater economic activity overall.
The Fed itself, according to its dot plot (a chart that records each Fed official’s projection for the central bank’s key short-term interest rate), projected three 0.25% cuts by the end of 2024. Yet, at the conclusion of the first quarter, the federal funds rate still remains locked in between 5.25% and 5.5%. While the stock market rally indicates that investors believe three or more rate cuts are still on the table for this year, history suggests that may not be the case.
