The first Federal Reserve meeting of the year took place 30–31 January 2024. Here’s everything you need to know about this week’s FOMC meeting and what it means for managing your wealth.
Behind the closed doors of meetings of the Federal Open Market Committee (FOMC), policymakers debate the course of benchmark interest rates. During its last meeting in December 2024, the Federal Open Market Committee (FOMC) kept rates steady and signaled several rate cuts throughout 2024.
According to the published data for 2024, GDP growth will move from 1.5% to 1.4%, unemployment will remain unchanged at 4.1%, and PCE inflation will decline from 2.5% to 2.4%. Based on this, FOMC members voted to change the key rate, which was reflected in the Fed’s dot plot. For 2024, the Fed’s median target rate is now 4.6% vs. 5.1% in June—down 0.50 basis points. Will these rates remain unchanged after January’s meeting?
In this blog, we'll discuss the meeting outcomes, implications and insights from this pivotal event and what it all means for the economy - and your nest egg.
(Please note: Official minutes from the meeting are not released until weeks afterward, and full transcripts are only made available five years later.)
Here are key takeaways from the Federal Reserve's January Meeting:
The FOMC holds eight regularly scheduled meetings per year. At these meetings, the Committee reviews economic and financial conditions, determines the appropriate stance of monetary policy, and assesses the risks to its long-run goals of price stability and sustainable economic growth.
In the most recent FOMC meeting conducted from January 30 - 31, the Federal Reserve kicked off the year in neutral, opting to keep interest rates unchanged at a meeting of its policy-setting committee on Wednesday.
The call, which was widely expected and unanimous, keeps the target range for the federal funds rate at 5.25%-5.50%.
The Federal Open Market Committee's policy statement omitted language suggesting there are more interest-rate increases to come. But policymakers aren't talking about cuts any time soon.
Fed Chair Jerome Powell began his post-meeting press conference by reiterating that inflation is "still too high," later adding that a March rate cut wasn't likely.
The FOMC meeting revealed U.S. stocks logged their biggest daily drop of 2024. The S&P 500 fell around 79 points, or 1.6%, to end near 4,846, according to preliminary closing data from FactSet. That marked the worst session for the large-cap index on a percentage-point basis since September, according to Dow Jones Market Data.
It also marked the worst Fed day performance for the index since March 2023.
Traders lowered their expectations for the Federal Reserve to begin cutting interest rates as soon as March after remarks made by Fed Chair Jerome Powell following the conclusion of the central bank’s policy meeting on Wednesday.
March is probably not the “base case” for when the Fed might start lowering its benchmark rate, Powell said during the press conference on Wednesday afternoon.
Stocks are falling after Federal Reserve Chairman Jerome Powell pushed back on market expectations for a Fed rate cut in March, saying it is “probably not” the most likely case. But a longer Fed pause that keeps the fed-funds rates at a 22-year high also means investors can enjoy roughly 5% on cash held in money-market funds and other cash-like investments for a while longer.
The Fed’s policy statement released earlier Wednesday included several tweaks that suggested the central bank was taking further rate hikes off the table but not yet ready to cut. Powell’s comments appeared to clarify for traders that the stance would continue for at least one more meeting.
For investors or those nearing retirement, understanding the Fed's long-term GDP projections is crucial for financial security. To effectively manage the repercussions of Fed decisions on your financial future, consider the following strategies:
At NJM Wealth Preservation Strategies, we prioritize transparency, trust, and results. Your financial well-being is our primary concern, ensuring your investments are expertly managed, even amid economic uncertainties.
The central bank’s next two policy decision dates are scheduled for March 20 and May 1. In recent months, traders and Wall Street strategists have focused on those two meetings as likely candidates for the first rate cut, as inflation continues to fall and job growth slows.
The Fed’s preferred inflation gauge, the personal consumption expenditures price index, is updated near the end of each month. There will likely be only one more PCE reading before the Fed’s March meeting, but three more before May. There will also be three more federal jobs reports released before the May meeting, with the January report due out later today.
Keeping a close eye on the Federal Reserve's meetings and their outcomes is essential for both investors and retirees, as the decisions made therein hold significant sway over the economy and financial markets. A robust investment strategy is crucial for navigating potential changes effectively.
NJM Wealth Preservation Strategies is a trusted ally when it comes to helping you protect your wealth. With a commitment to tailored solutions and a comprehensive grasp of financial dynamics, NJM is adept at optimizing retirement income and preserving wealth, regardless of market fluctuations.
Entrusting your investments to fiduciary Nic J. McLeod and his dedicated team provides competent and informed wealth management strategies, so you can have peace of mind knowing that your financial assets are in capable hands.