In 'Remarkable Shift,' Fed Predicts 3 Rate Cuts in 2024

Stocks surged on Wednesday after the Federal Reserve left its key interest rate unchanged for the third meeting in a row—and predicted that there would be three rate cuts next year. The Fed signaled that inflation had come down faster than expected, opening the door to interest rate cuts, though officials didn't rule out higher rates if the situation changes, the Wall Street Journal reports. The Fed said "inflation has eased over the past year, but remains elevated," which the AP notes is the first time the central bank has formally acknowledged progress in the fight against inflation.

After Wednesday's meeting, the Fed's benchmark interest rate remains at between 5.25 and 5.5%, its highest in 22 years. The Fed signaled that three quarter-point cuts are likely to happen next year, but some analysts are predicting five, the AP reports. Ben Casselman at the New York Times notes that just weeks ago, "the dominant discussion in economic circles was whether the Fed was done raising rates. Now they're penciling in three cuts next year. It's a remarkable shift." (More Federal Reserve stories.)