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For the third straight meeting in 2024, the Federal Reserve Open Market Committee (FOMC) elected to hold rates steady.

The decision represents the sixth consecutive rate pause dating back to 2023. As a result, the target range for the federal funds rate will remain between 5.25% and 5.5%. The Federal Reserve hiked rates for 11 consecutive meetings from 2022 to 2023 in an attempt to cool the economy.

"At the beginning of the year, we gave a 75% probability that the Fed would cut rates twice this year. We always thought it would be in the second half of the year, but added a caveat that stronger than expected economic data was part of that 25% off chance," says Zonda chief economist Ali Wolf. "I’d say we are now closer to 60% for two rate cuts. The Fed needs to see multiple months of slowing economic data before they would feel comfortable cutting, and they will be conscious of not trying to come off political and cut too close to the election."

In its most recent announcement, the FOMC said there “has been a lack of further progress” towards the long-term goal of 2% annual inflation. Last month, the consumer price index rose by 3.5% on an annual basis, driven by rising housing costs and insurance rates. After cooling from levels of 9% in 2022, inflation has remained between 3% and 4% dating back to 2023.

While inflation has remained elevated, the jobs market has remained relatively resilient as well. Through the first three months of the year, the economy has added an average of 276,333 jobs on a monthly basis. The unemployment rate has also remained below 4% through the first three months of the year.

"We are in an environment where good news is bad news when it comes to hoping for rate cuts," Wolf says. "The economy is holding up, which is to be celebrated given a head of the headwinds. The problem is that strong economic data means higher interest rates. We’ve seen some consumers start to pull back again as they everything in."

Data for April will be released by the U.S. Bureau of Labor Statistics on Friday, May 3.

“The Committee judges that the risks to achieving its employment and inflation goals have moved toward better balance over the past year,” the FOMC said in a news release announcing its decision. “The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.”

As it has indicated in recent rate decisions, the Fed said it does not expect it will be appropriate to reduce the target range of the federal funds rate “until [the Fed] has gained greater confidence that inflation is moving sustainably toward 2%.”

Wolf says while some buyers have figured out how to navigate higher rates, some future demand may be reliant on rates coming down in the second half of the year.

"We’ve seen that there are buyers who have figured out ways to make the market work for them despite higher interest rates," Wolf says. "If we think about future demand, though, there’s been a lot of hope and emphasis on rates coming down over the next handful of months. We haven’t seen that yet, though, and so each sale has builders looking further down their interest list."