ALBAWABA – The United States (US) Federal Reserve (Fed) late on Wednesday announced the Federal Open Market Committee (FOMC) had decided to pin US interest rates for at least the next few weeks and reaffirmed hopes for multiple rate cuts in 2024.
Currently at a 22-year high, the Fed pinned US interest rates for the third straight meeting but signalled they expect to make up to three rate cuts in the new year, according to Agence France-Presse (AFP).
The committee voted in favour holding US interest rates at the current 5.25-5.5 percent range, saying it helps policy makers assess the need for “any additional” policy adjustments, the Fed statement said.
The word “any” in the bank’s statement is intended as "an acknowledgement that we believe that we are likely at or near the peak rate for this cycle," Fed Chair Jerome Powell told reporters.
He added that policymakers had discussed when it would be "appropriate" for the Fed to begin cutting interest rates, while refusing to rule out another hike.
Stock indexes on Wall Street surged after the Fed's decision, with the Dow Jones Industrial Average closing at an all-time high, AFP reported.
Fed pins US interest rate, signals possible cuts in 2024 - Shutterstock
The Fed's stance signals a continuation of its long-running battle to slow inflation towards its long-term target of two percent amid a recent flurry of positive economic news.
However, FOMC members cut the median projection for interest rates at the end of next year to the midpoint between 4.50 and 4.75 percent, signaling they now expect 0.75 percent rate cut, overall.
At 0.25 percent per cut, this would translate to three rate cuts next year – one more cut than most analysts were predicting as the Fed went into the meeting on Tuesday, according to AFP.
The FOMC now expects the US economy to grow by 2.6 percent this year, up from 2.1 percent in September, before slowing down to 1.4 percent in 2024.
Notably, the Fed, which has a dual mandate to tackle inflation and unemployment, is the first major central bank to unveil its interest rate decision this week.
Later today, the European Central Bank and the Bank of England will publish their own rate decisions, and are also expected to hold rates in the face of slowing inflation.
