Good news for 401(K)s! Stocks hit record-high after Federal Reserve keeps interest rates steady AGAIN - but promises multiple cuts later in the year
- The Fed held its benchmark rate at its current high between 5.25 and 5.5 percent
- Any cuts later this year would be the first since rates began rising in March 2020
- The central bank did not commit to a date for when it may start reducing rates
Stocks rose to a record high Wednesday afternoon after the Federal Reserve voted to hold interest rates steady for a fifth consecutive meeting.
The S&P 500 topped 5,200 for the first time ever amidst expectations that officials will cut rates three times later in the year.
The Fed's benchmark funds rate - which has a knock-on effect on mortgages and credit card loans - will remain at its current level of between 5.25 and 5.5 percent where it has been since last July.
Alongside the decision, policymakers penciled in three quarter-percentage point cuts by the end of the year.
But the central bank said it still needs more evidence that inflation is falling before it can make any moves and did not commit to any date when it may start cutting rates.
![The Federal Reserve has voted to hold interest rates steady for the fifth consecutive meeting today, but has indicated it is sticking with plans to cut rates multiple times this year](https://i.dailymail.co.uk/1s/2024/03/20/18/82699153-13220085-image-a-1_1710961111530.jpg)
The Federal Reserve has voted to hold interest rates steady for the fifth consecutive meeting today, but has indicated it is sticking with plans to cut rates multiple times this year
As well as the S&P's momentous gains, the Nasdaq Composite jumped 1.2 percent and the Dow Jones Industrial Average added 400 points - or 1 percent.
While investors had widely expected the Fed to hold rates steady, Wall Street was braced for the economic projections released Wednesday for any indication of how inflation reports so far this year would influence the central bank's outlook.
The rate of inflation rose slightly to 3.2 percent in February, from 3.1 percent the month prior.
Rising gas prices have made inflation stubborn - with experts questioning whether it will drop down to the Fed's 2 percent target as quickly as anticipated.
Benchmark borrowing costs are currently at a 23-year high, which feeds through to consumer debt.
![Policymakers penciled in three quarter-percentage point cuts by the end of the year (Pictured: Chair Jerome Powell speaking at a press conference Wednesday)](https://i.dailymail.co.uk/1s/2024/03/20/18/82698673-13220085-image-a-104_1710960195258.jpg)
Policymakers penciled in three quarter-percentage point cuts by the end of the year (Pictured: Chair Jerome Powell speaking at a press conference Wednesday)
![Inflation rose slightly to 3.2 percent in February as prices were pushed up by housing costs and gas](https://i.dailymail.co.uk/1s/2024/03/20/19/82360093-13220085-Inflation_rose_slightly_to_3_2_percent_in_February_as_prices_wer-a-40_1710964701031.jpg)
Inflation rose slightly to 3.2 percent in February as prices were pushed up by housing costs and gas
If the Fed does cut rates this year, it would be the first time since the central bank began its aggressive rate hiking policy in March 2022.
Speaking at a press conference following the announcement, Chair Jerome Powell remained cautious about any timeline.
'We make decisions meeting by meeting, and we did not make any decisions about future meetings today,' he said.
'Those are going to depend on our ongoing assessment of the incoming data, the evolving outlook and the balance of risks.
'I would say that the Committee wants to see more data that gives us higher confidence that inflation is moving down sustainably toward 2 percent.'
According to the CME Fedwatch Tool, 67.9 percent of investors are banking on a rate cut coming at the Fed's June 12 meeting.
Some 30.6 percent expect the rate to between 4.25 percent and 4.5 percent by the end of the year - signaling three cuts. Some 33.9 percent, however, believe it will only go as low as between 4.5 and 4.75.