The higher for longer narrative at the Fed is going to increase the likelihood of a recession in 2024

The Federal Reserve paused its interest-rate hikes after 15 months of consecutive increases but signaled further tightening to combat inflation. The FOMC decided to maintain the federal funds rate at 5% to 5.25%, providing the committee a chance to evaluate additional data. The Fed's new dot plot shows a median projection of borrowing costs rising to 5.6% by the year-end. All 18 policymakers unanimously voted for this pause, with 12 expecting rates at or above 5.5% to 5.75%, indicating further tightening to control inflation. Chairman Jerome Powell indicated that nearly all Fed officials agree that a "somewhat further" increase in interest rates will be appropriate in 2023. However, Powell refused to confirm if another hike could occur as soon as July.