Zforex
zForex.com Representative
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The Federal Reserve kept its benchmark interest rate steady, indicating that rates are likely to remain high for an extended period after one more increase later this year. The Federal Open Market Committee, responsible for the US central bank's policy decisions, released a statement after their meeting, stating that they will determine the need for additional policy tightening. Fed Chair Jerome Powell emphasized their willingness to raise rates further until they are confident that inflation is moving towards their 2% target sustainably. The federal funds rate remained in the range of 5.25% to 5.5%, with 12 of 19 officials favoring another rate hike in 2023 to control inflation.
Powell stated their commitment to a restrictive monetary policy to achieve the 2% inflation goal. Fed officials now project a reduction in the federal funds rate to 5.1% by the end of 2024, reflecting renewed economic strength. This rate is expected to fall further to 3.9% by the end of 2025 and 2.9% by the end of 2026. Following the Fed's decision.
The Fed's strategy has shifted to a slower pace of interest rate increases, allowing incoming data to determine the peak interest rate level as inflation moves towards the 2% target. Inflation, excluding food and energy, increased by 4.2% in the 12 months through July. Officials project inflation to fall below 3% next year and return to 2% by 2026. Economic growth is expected to slow to 1.5% in 2024, following an upward revision to 2.1% in 2023.
The projection of higher interest rates for a longer period is influenced by a more optimistic view of unemployment, with the jobless rate expected to reach 4.1% in 2024, compared to the June projection of 4.5%. Powell clarified that a "soft landing" for the US economy is not the Fed's primary expectation, but it remains their primary goal to contain inflation.
Powell stated their commitment to a restrictive monetary policy to achieve the 2% inflation goal. Fed officials now project a reduction in the federal funds rate to 5.1% by the end of 2024, reflecting renewed economic strength. This rate is expected to fall further to 3.9% by the end of 2025 and 2.9% by the end of 2026. Following the Fed's decision.
The Fed's strategy has shifted to a slower pace of interest rate increases, allowing incoming data to determine the peak interest rate level as inflation moves towards the 2% target. Inflation, excluding food and energy, increased by 4.2% in the 12 months through July. Officials project inflation to fall below 3% next year and return to 2% by 2026. Economic growth is expected to slow to 1.5% in 2024, following an upward revision to 2.1% in 2023.
The projection of higher interest rates for a longer period is influenced by a more optimistic view of unemployment, with the jobless rate expected to reach 4.1% in 2024, compared to the June projection of 4.5%. Powell clarified that a "soft landing" for the US economy is not the Fed's primary expectation, but it remains their primary goal to contain inflation.
