Key takeaways

  • The Federal Open Market Committee (FOMC) announced on January 31, 2024, that it would maintain its policy rate in a range of 5.25% to 5.5%.
  • The January decision marks the fourth straight meeting at which the Federal Reserve (Fed) has opted to hold interest rates steady.
  • While the fed funds rate has likely reached its peak for this tightening cycle, questions remain about the timing and extent of potential 2024 rate cuts.


China Llanos

Digital Content Writer & Editor, J.P. Morgan Wealth Management

The Federal Reserve (Fed) announced at its January 2024 meeting that it would maintain the overnight federal funds rate at the current range of 5.25% to 5.5%.1 The decision marks the fourth straight meeting at which policymakers have opted to hold rates steady, dating back to September 2023.2

Regarding future interest rate cuts, Chairman Jerome Powell held back on any definitive timeline. “The mantra for today’s press conference appeared to be ‘more data.’ Powell acknowledged that good progress has been made, but the committee would like to be more confident that inflation is coming down sustainably to 2%” noted Ajene Oden, Global Investment Strategist for J.P. Morgan’s Global Investment Strategy team.

While market observers and participants widely anticipated that the central bank would keep rates at current levels, the financial world will continue to keep an ear turned up for any further hints about the timing and extent of potential rate cuts throughout the year. Additionally, reports showing inflation moderating over recent months have been encouraging, but December data showing a hotter-than-expected labor market and an uptick in inflation have raised questions about when the Fed might realistically consider cutting rates.

An uncertain path forward

The post-meeting press conference can offer additional insight into the FOMC’s thinking and the potential next steps. However, those looking for hints about the proximity of rate cuts received few definitive answers from Powell.

After highlighting the strength of the economy and the success of the Fed’s policies aimed at bringing cost increases under control, Powell issued a rather somber reality check. “Inflation is still too high,” the Fed chair cautioned. “Ongoing progress in bringing it down is not assured, and the path forward is uncertain.”3

Those looking for some confirmation that a rate-cutting cycle remains on the table for 2024 did receive some positive news. “We believe that our policy rate is likely at its peak for this tightening cycle and that, if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell explained, though he did assert that a rate reduction at their next meeting, scheduled for March 19–20, seems unlikely.

However, the Fed chair remained insistent that more evidence is needed before the easing cycle can begin. He stressed that policymakers remain “highly attentive” to inflationary risks, indicating that the Fed is prepared to maintain the policy rate at current levels for longer if necessary.

“The lower inflation readings over the second half of last year are welcome, but we will need to see continuing evidence to build confidence that inflation is moving down toward our goal,” Powell said.

What else did Powell not confirm? A successful soft landing. Oden remarks, “Even though Chairman Powell wouldn’t declare a soft landing achieved, he acknowledged that a string of good data from the labor market, inflation and supply chains normalizing is providing the committee with confidence that they will be able to reach their goal.”

Market reaction

On what was already a down-trending day for the stock market, U.S. equities moved lower in the afternoon following the Fed’s announcement. Although markets largely expected that rates would remain steady at the January meeting, Powell’s comments likely deflated investors’ hopes for a rate cut in March.

The Dow Jones Industrial Average sank around 300 points during the post-meeting press conference, closing the day with losses of around 0.8%. The S&P 500 dropped 1.6% on the day of the Fed’s announcement, while the Nasdaq fell 2.2%.

The bottom line

At its January 2024 meeting, the Federal Reserve maintained interest rates at their decades-high range. The Fed’s statement stressed the need for continuing evidence that inflation has been stabilized on a sustained basis before it will be appropriate to begin the easing cycle.

Although Powell downplayed the likelihood of a rate reduction at the upcoming meeting in March, he suggested that the central bank remains on track to cut rates sometime in 2024. Market observers will be keeping a close eye on inflationary and economic data as they seek clarity on the uncertain path forward for the Fed as it aims for a decisive victory over inflation while minimizing the damage to the economy.

“In summary, Powell’s response to the question of March policy cut as unlikely, emphasized that the Fed is seeking more data to bring greater confidence that inflation has sustainably come down to their 2% target. This supports our forecast of 125 basis points of cuts this year beginning in June,” Oden stated.



Board of Governors of the Federal Reserve System. “Federal Reserve Issues FOMC Statement.” (January 2024).


Board of Governors of the Federal Reserve System. “Open Market Operations.” (January 2024).


Board of Governors of the Federal Reserve System. “FOMC Press Conference.” (January 2024).

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