Investors in Washington, D.C. are eagerly awaiting the announcement from Federal Reserve officials this afternoon regarding potential changes in interest rate cut projections for 2024. Before unveiling their predictions, policymakers will review a new inflation reading from the Consumer Price Index (CPI), expected to show ongoing moderation in May following positive results in April.

The expected decrease in the year-over-year change in “core” CPI, excluding volatile food and energy prices, to 3.5% compared to 3.6% in April and 3.8% in March is anticipated. Despite this improvement, the Fed is likely to maintain a cautious stance at today’s policy meeting, keeping rates steady at a 23-year high.

During the meeting, the Fed will disclose updated projections on 2024 rate cuts through a “dot plot,” revealing each Fed official’s prediction about the federal funds rate’s direction. Previous projections for three cuts are now uncertain due to persistent inflation readings in the first quarter and cautious Fed remarks. Investors now anticipate only one cut, a significant decrease from initial expectations earlier in the year.

Along with the inflation report, the Fed officials will present fresh forecasts on inflation, the economy, and unemployment. Fed Chair Jay Powell emphasized the need for substantial data before deciding on rate cuts, indicating that a cut at the upcoming September meeting would require consecutive positive inflation reports in the following months.

Market expectations suggest a 48% chance of rate cuts during the September meeting, with November and December meetings seen as more probable opportunities for the first cut. The policy decision will be announced at 2 pm ET, followed by a press conference by Powell at 2:30 pm ET. This crucial meeting may offer insights into the Fed’s future stance on interest rates, influencing market trends and investor decisions.