• Home
  • News
  • Federal Reserve Holds Interest Rates in 2023, Eyes 2024 Rate Cuts Amidst Signs of Inflation Easing

Federal Reserve Holds Interest Rates in 2023, Eyes 2024 Rate Cuts Amidst Signs of Inflation Easing

News BY Shahanawaz Dec 12, 2023
Federal Reserve Holds Interest Rates in 2023

 The nation’s central bank has wrapped up another year addressing post-pandemic inflation. In its final decision of 2023, the Federal Open Market Committee (FOMC) declared a continuation of the pause on interest rate hikes. The benchmark rate will remain steady within the range of 5.25% to 5.5%. This announcement closely follows a positive development in the form of the Consumer Price Index (CPI), indicating a year-over-year rise in inflation of 3.1%, a slight decrease from the October figure of 3.2%.

The Fed’s Summary of Economic Projections for 2024 includes expectations for three interest rate cuts, a forecast subject to change according to Fed Chair Jerome Powell. Powell, cautious during the press conference, refrained from specifying when the rate cuts might occur, emphasizing that it is not a current topic of discussion within the FOMC. Despite the CPI remaining above the Fed’s 2% inflation target, signs of a slowdown are seen as crucial confirmation of the country’s positive trajectory, potentially paving the way for rate cuts in the upcoming year.

In a December discussion at Spelman College, Powell acknowledged the Fed’s successful efforts in combating inflation, underscoring the importance of maintaining public confidence in the Fed’s ability to manage inflation expectations. He highlighted the careful approach the FOMC is taking, recognizing the balanced risks of under and over-tightening.

Looking ahead to 2024, Treasury Secretary Janet Yellen expressed optimism about the US economy, foreseeing a “soft landing” where inflation is addressed without a severe economic downturn. Yellen noted a meaningful decline in inflation and expressed confidence that it would gradually align with the Fed’s mandates.

Despite Yellen’s positive outlook, there are recession concerns for 2024. UBS economists anticipate a recession in the second or third quarter, attributing it to the ongoing slowdown in both headline and core inflation. They predict corresponding rate cuts by the Fed. In contrast, Bank of America CEO Brian Moynihan foresees a slowdown but rules out a recession, aligning with his research team’s projection of an economic deceleration in the middle of the next year.

Continue Reading:

Shahnawaz is a passionate and professional Content writer. He loves to read, write, draw and share his knowledge in different niches like Technology, Cryptocurrency, Travel,Social Media, Social Media Marketing, and Healthcare.

View All Post

Leave A Reply

Your email address will not be published. Required fields are marked *

You May Also Like