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Market Update

March madness: central bank decisions grab headlines

March 25, 2024
  • amol dhargalkar headshot


    Amol Dhargalkar

    Managing Partner, Chairman
    Global Head of Corporates

    Kennett Square, PA


The Federal Open Market Committee (FOMC) and the Bank of England (BoE) kept rates steady, while the Bank of Japan and the Turkish Central Bank caught the market’s attention with decisions of their own. Elsewhere, February existing home sales exceeded expectations, and equity indexes hit record highs.

Fed falls in line with market expectations, holds rates steady

The FOMC held rates steady once again, unanimously voting to keep the fed funds rate at the target range of 5.25% - 5.50%. In line with the decision, also came the quarterly Summary of Economic Projections. The new Fed dot plot showed some movement from the December 2023 dot plot, but the median projection of three 25 basis-point interest rate cuts in 2024 remained. Rate projections did increase in 2025 and the “longer run,” signaling the potential for rates to stay higher for longer.

Other changes in the Summary of Economic Projections included a notable increase in the median GDP projection for 2024, up to 2.10% from the December projection of 1.40%. Median GDP projections in 2025 and 2026 inched higher as well, both now sitting at 2.00%, compared to 1.80% and 1.90% respectively in December.

The median projection for core PCE inflation climbed to 2.60% for 2024, up from 2.40% in the December release. Projections for 2025 and 2026 remained steady, sitting at 2.20% and 2.00%.

Markets are largely aligned with the FOMC, projecting three rate cuts in 2024. The speed at which those cuts occur, however, could lead to risk in the medium-term and has led to organizations exploring their hedging options. Based on CME fed funds futures, the market is projecting the first rate cut to occur in June with 65%.

Source: Fed’s Summary of Economic Projections

Rates around the world

The BoE also kept interest rates flat at 5.25% but indicated rate cuts are likely to come later this year. U.K. inflation continued its descent in February, coming in at 3.40% after back-to-back months of 4.00% inflation in December and January. While the BoE indicated that inflation is “moving in the right direction”, February’s reading is still much higher than the central bank’s 2.00% target. GBP weakened against the U.S. dollar after the central bank decisions.

Elsewhere, the Bank of Japan (BOJ) made headlines by hiking interest rates for the first time in 17 years to a target range of 0.00% - 0.10%. Inflation coming back down towards the BOJ’s 2.00% target contributed to the decision, as did the recent announcement of strong wage hikes. JPY weakened on the news, hitting its weakest point against the euro since 2008, and a four-month low against the dollar.

Not to be outdone by the Bank of Japan, the Turkish Central Bank raised rates by an astonishing 500 basis points to 50.00% just days before nationwide local elections. The hike was a strong message from the Central Bank as Turkey battles inflation that eclipsed 67.00% in February.

Strong readings indicate a healthy U.S. economy

Somewhat overshadowed by all the central bank news, several economic indicators produced strong readings last week, fueling the narrative that the U.S. economy is in good standing.

Existing home sales skyrocketed by 9.50% in February, totaling 4.38 million compared to market projections of 3.95 million. February’s increase was the largest since February 2023, even amid the highest median home price for any February on record.

Initial jobless claims also surprised the market, falling by 2,000 to a total of 210,000. The labor market has remained robust in 2024, a sentiment that Fed Chair Jerome Powell reiterated in remarks last week.

Equity markets continued to surge, as the three major U.S. stock indexes (Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite) all hit or neared record highs last week.

The week ahead

Markets will continue to monitor rates in the wake of major central bank decisions. Major U.S. data this week include the March consumer confidence reading on Tuesday and inflation data on Friday.

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About the author

  • Amol Dhargalkar

    Managing Partner, Chairman
    Global Head of Corporates

    Kennett Square, PA

    Amol Dhargalkar is a Managing Partner and Chairman for Chatham’s Board of Directors. He is the Global Head of the Corporates sector and brings over 20 years of experience in derivatives capital markets expertise.


Chatham Hedging Advisors, LLC (CHA) is a subsidiary of Chatham Financial Corp. and provides hedge advisory, accounting and execution services related to swap transactions in the United States. CHA is registered with the Commodity Futures Trading Commission (CFTC) as a commodity trading advisor and is a member of the National Futures Association (NFA); however, neither the CFTC nor the NFA have passed upon the merits of participating in any advisory services offered by CHA. For further information, please visit