While investors panicked by the outlook, what does this mean for mortgages and savings accounts?
A more cautious and conservative Federal Reserve will likely influence Wall Street’s playbook for the new year.
At the December policy meeting of the Federal Open Market Committee (FOMC), Fed officials signaled to the financial markets that they would pursue a slower path of easing through 2025. Retail traders and institutional investors were unhappy, though market watchers widely anticipated a more methodical approach to normalizing interest rates amid renewed inflationary pressures.
Panic hit the New York Stock Exchange when the Fed updated the Summary of Economic Projections. The quarterly survey revealed that policymakers anticipate two quarter-point interest rate cuts next year, down from the previously penciled-in four reductions to the benchmark federal funds rate.
Policymakers predict the median policy rate will reach 3.9 percent by the end of next year, down from the current range of 4.25–4.5 percent.
Federal Reserve Chair Jerome Powell conveyed to the financial markets that inflation risks are higher than when the central bank launched the easing cycle in September.
“As we think about further cuts, we’re going to be looking for progress on inflation,” said Powell, noting, “We have been moving sideways on