Fed Holds Rates at 5.50%, Trims Down Projections to One From Three Cuts This Year

Stocks were rocketing higher as investors digested latest report from the US central bank but were hyped from inflation data.

• The US Federal Reserve maintained the rate of its benchmark interest rate at 5.50% but penciled just one interest rate cut for this year, down from a prior projection of three. The central bank pushed back against expectations that it will move fast in lowering borrowing costs. Investors, on the other side, took it well. Stocks maintained a steady course after the report, largely assuaged by a drop in inflation for May.
• Fed policymakers described the progress on inflation as “modest” in their statement. Further, seven of 19 officials project one rate trim this year and four see no cuts at all. The remaining eight central bankers were in favor of two reductions to borrowing costs in 2024. The Fed only has four more meetings until the end of the year.
• Wall Street’s major averages still rocketed higher, unfazed by the lowered expectations for interest rate cuts. The S&P 500 was higher by 1% in mid-session and the Nasdaq Composite was pushing higher by a monster 1.8% at the same time stamp. The Dow Jones Industrial Average was up more modestly with just about a 30-point increase.