The Fed now expects just one interest rate cut this year — but there's still time for that to change, Powell says

• The Federal Reserve held interest rates steady in its latest decision on Wednesday.
• Its Summary of Economic Projections also penciled in just one interest rate cut for 2024.

The odds of an interest rate cut this year just got slimmer.

On June 12, the Federal Open Market Committee announced that it would hold interest rates steady as the nation's central bank continues to work to lower inflation to its 2% target.

Notably, alongside the Federal Reserve's interest rate decision, the FOMC also released its Summary of Economic Projections — and the committee now has just one interest rate cut penciled in for 2024, with further cuts expected in 2025.

Fed Chair Jerome Powell said during the Wednesday press conference that when looking at the FOMC's projections, they should be viewed as just that: projections. There's still time for them to change based on upcoming economic data, he said, and it's "plausible" that a rate cut could happen as soon as September.

"We want to gain further confidence. Certainly, more good inflation readings will help with that," Powell said.

"It's going to be the totality of the data, what's happening in the labor market, what's happening with the balance of risks, what's happening with the forecast, what's happening with growth," he added. "You look at all of that, and you ask, 'Are we confident? Have we reached an appropriate level of confidence that inflation is moving down sustainably to 2%, or alternatively, do we see really unexpected signs of weakness in the labor market?'"

The Consumer Price Index, which measures inflation, rose 3.3% year over year in May, a slight decrease from April's 3.4% reading, showing the economy is headed in the right direction. While Powell said the latest reading is a positive sign, it's not sufficient to allow the Fed to loosen its restrictive monetary policy.

However, some Democratic lawmakers have urged Powell to cut rates sooner rather than later, given the financial strains Americans continue to face under high inflation. Powell acknowledged those pains but reiterated that it's most important for the Fed to hold off on cutting until it gets more data rather than cutting too soon and having to raise rates again at a later date.

"In the meantime, it's going to be painful for people, but the ultimate pain would be a long period of high inflation," Powell said. "It is people who have lower incomes, people at the margins of the economy who have the worst experience, who experience the most pain from inflation. So you know, it's for those people, for all Americans, but particularly for those people, that we're doing everything we can to bring inflation back down under control."