For all that investors flipped, flopped, and flipped again in the past six months of speculation over future interest rates, the Federal Reserve has remained remarkably consistent. In a total confirmation of its previous projection from the end of 2023, the first summary of economic projections from the central bank in 2024 likewise predicts just three cuts to the federal funds rate this year, with the Fed holding rates at the 23-year high of the 5.25% to 5.5% range. But even though the Fed still projects higher interest rates for longer, it made one crucial modification to its projections: even higher inflation for longer.

In December, the Fed predicted that median core PCE inflation for 2024 would fall to 2.4%, just shy of its 2% goal. But now, it predicts a 2024 median of 2.6%. And whereas it considers its low unemployment rate projection even more broadly balanced than it did in December, the Fed now sees upside risks to inflation projections. While the Fed remains committed to approaching its 2% median inflation target in the next two years, not one member contributing to March’s SEP believes inflation will do so this year.