The Federal Reserve signaled on Wednesday that it would cut interest rates twice more this year, after cutting the federal funds rate by 50 basis points to a range of 4.75%-5.0% at the end of its meeting on Wednesday.

Fed officials expect the fed funds rate to fall to 4.4% in 2024, suggesting the Fed will cut rates by another 0.50% later this year. Outside of Wednesday’s jumbo 50 basis point cut, the Fed has taken 25 basis point steps over the past year, indicating the central bank expects to cut rates twice more in 2024. The previous forecast in June peaked at 5.1%.

Along with the policy announcement, the Fed released updated economic forecasts in its Summary of Economic Projections (SEP), including its “dot plot,” which charts policymakers’ expectations about future interest rates.

A total of 17 officials predicted further easing this year, with only two seeing rates held steady for the rest of the year. Seven officials estimated just one more cut, while nine officials expected two more cuts. One official predicted three cuts by year’s end.

Next year, a majority of officials expect the fed funds rate to hit 3.4%, down from the 4.1% expected in the previous forecast. That suggests four more rate cuts in 2025. Officials expect two more cuts from there in 2026, which would bring the fed funds rate down to 2.9%.

The updated forecasts show the Federal Reserve has begun its long-awaited easing cycle as the central bank attempts to engineer a soft landing for the economy, with price increases stabilizing and employment remaining robust.

Inflation has moderated so far this year but is still above the Federal Reserve’s 2% annual target, driven by higher-than-expected monthly core price readings in recent months.

The labor market has also been a particular focus for the Fed after the unemployment rate unexpectedly rose to 4.3% in July. It has since fallen to 4.2%, as FOMC members debate whether the recent weakness in the labor market signals a gradual cooling or a rapid weakening.

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