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In June 2024, for the seventh consecutive meeting, the Federal Reserve decided to maintain the federal funds target range at 5.25%-5.50%, aligning with predictions. The Fed’s policymakers anticipate that until there is greater confidence in inflation sustainably approaching 2%, a reduction in rates will not be deemed appropriate. The current dot plot indicates that policymakers foresee a singular rate cut within the year and anticipate four cuts in 2025, a shift from the March expectation of three reductions for both 2024 and 2025. 

Regarding economic projections, the Federal Reserve has made no adjustments to its GDP growth forecasts, continuing to expect the economy to grow by 2.1% in 2024 and by 2% in both 2025 and 2026. However, there has been a revision in the Personal Consumption Expenditures (PCE) inflation outlook, now expected to be 2.6% for 2024 (up from 2.4% in the March forecast) and 2.3% for the following year (previously 2.2%), but it remains projected at 2% for 2026. Similarly, Core PCE inflation estimates have been raised to 2.8% for 2024 (from 2.6%) and to 2.3% for 2025 (from 2.2%), yet it continues to be projected at 2% for 2026. 

The unemployment rate’s forecast remains steady at 4% for 2024, consistent with the March prediction. However, it is anticipated to slightly increase to 4.2% in 2025, a minor adjustment from the previously expected 4.1%. 

The US stock market had a varied close on Wednesday. The S&P 500 increased by 0.85% and the Nasdaq Composite rose by 1.54%, both reaching new record levels, whereas the Dow dropped by 35 points (-0.09%). Technology stocks were at the forefront of the day’s trading. In contrast, the energy, consumer staples, and utility sectors did not perform as well. Among the big caps, Apple (AAPL.US) saw a 2.86% increase, Nvidia (NVDA.US) was up by 3.55%, and Microsoft (MSFT.US) experienced a 1.94% rise. Regarding corporate announcements, Oracle’s (ORCL.US) shares soared by 13.32% to a record peak following news of its new cloud agreements with Google and OpenAI. 

(S&P 500 Index Six-month Chart) 

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