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I know the Fed Funds rate has been increasing to lower the inflation rate, but what happens to the Feds Fund rate (will it increase, decrease, or stays constant?) after the inflation rate has been lowered to the projected level (e.g. 2.0%)?

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If you read the recent speeches by members of the Federal Open Markets Committee, which sets the target Fed funds rate, a majority seems to favor cutting rates once they are convinced that inflation is definitively falling towards the 2% target. Indeed, the Summary of Economic Projections published by the Fed in December 2023 contains a median forecast of 4.6% for Fed funds by year end 2024, a cut of 0.8%

https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20231213.pdf

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  • $\begingroup$ Thanks. I'm not sure if I see 4.625% or 0.625% in the pdf? $\endgroup$ Jan 24 at 7:36
  • $\begingroup$ You are right , they rounded everything. I will edit $\endgroup$
    – dm63
    Jan 24 at 10:41

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