The Federal Reserve held interest rates steady Wednesday after a year of remarkable progress in its fight against inflation, signaling their rate hike crusade may be coming to an end.
"We are likely at or near the peak rate for this cycle," Fed Chair Jerome Powell said at a press conference following the announcement.
The Federal Open Market Committee (FOMC) — the panel of Fed officials responsible for monetary policy — kept its baseline interest rate at a range of 5.25 to 5.5 percent following its final meeting of the year. The central bank raised rates to that level in July and has now kept them there after three consecutive meetings.
‘Too early for victory laps’: Fed inflation fight looms over Biden Financial and economic experts expected the Fed to maintain its baseline interest rate range as inflation continues to fall but remains above the bank’s target of 2 percent annual price growth.
Consumer prices were up 3.1 percent annually as of November, according to Labor Department data, well below the 9.1 percent annual inflation rate clocked in June of last year.
The economy has also fared far better than many forecasters expected and avoided a recession seen by many experts as inevitable. Just 3.7 percent of American workers were unemployed in November, according to Labor Department data, in line with pre-pandemic numbers.
Inflation falls to 3.1 percent as Fed holds crucial meeting With inflation still above target and the economy holding strong, the Fed is hoping to maintain progress by keeping rates at a 22-year high. Higher interest rates tend to slow the economy and reduce spending on goods and services that could drive up prices.
The Fed, however, is also facing calls to cut interest rates next year before the weight of high borrowing costs takes a steeper toll on the economy.
Fed officials have said little about their plans for 2024, and leaders have been wary to declare victory against inflation.
Even so, all but three FOMC members expect the Fed to cut rates at least twice next year, according to economic projections released Wednesday.
Powell has also warned that it is too soon to know if inflation is on track to return to pre-pandemic levels and would not rule out future rate hikes.
The committee's outlook on gross domestic product came in at 2.6 percent, up significantly from its September projection of 2.1 percent following surprisingly hot economic growth. But the members expect that growth to slow to 1.4 percent in 2024, in line with their earlier projections.
Economic growth and unemployment are two key metrics the Fed will be watching as they walk the line between cooling the economy without triggering a recession. While employment has been below 4 percent for the longest stretch in decades, the committee expects that to change in 2024, ticking up to 4.1 percent.
Updated at 2:46 p.m.
Fed keeps rates at 22-year high as inflation retreats
23
0
13.12.2023
The Federal Reserve held interest rates steady Wednesday after a year of remarkable progress in its fight against inflation, signaling their rate hike crusade may be coming to an end.
"We are likely at or near the peak rate for this cycle," Fed Chair Jerome Powell said at a press conference following the announcement.
The Federal Open Market Committee (FOMC) — the panel of Fed officials responsible for monetary policy — kept its baseline interest rate at a range of 5.25 to 5.5 percent following its final meeting of the year. The central bank raised rates to that level in July and has now kept them there after three consecutive meetings.
‘Too early for victory laps’: Fed inflation fight looms over Biden ........
© The Hill
visit website
login
who are we?
contact us
qosheapp
Toi Staff
Gideon Levy
Belen Fernandez
Rami G Khouri
Mort Laitner
Tarik Cyril Amar
Rachel Marsden
Bradley Blankenship
Michael Kwet
