The Fed keeps interest rates unchanged, signaling it may raise rates again this year

Published On:Sep,21 2023    Hits: 193
The U.S. Federal Reserve kept its key interest rate unchanged on Wednesday (September 20), the second time in its last three meetings that it has done so, a sign that it is easing its measures to combat inflation as price pressures ease. However, Fed officials also signaled that they still expect another interest rate hike this year.

Inflation, as measured by consumer prices, has fallen to 3.7% from a year-on-year peak of 9.1% in June 2022, but is still well above the Feds 2% target. Fed policymakers made it clear on Wednesday that they are not close to declaring resistance. The key to victory for inflation. The current period of inflation is the worst in 40 years. The Feds latest decision keeps its benchmark interest rate at about 5.4%. The Federal Reserve began raising interest rates in March 2022, and after raising interest rates 11 times, interest rates have reached their current levels.

Interest rate hikes by the Federal Reserve, the U.S. central bank, have dramatically increased the cost of borrowing for consumers and businesses. The Federal Reserve is trying to guide the U.S. economy toward a subtle "soft landing" by fine-tuning its interest rate policy, which will cool down inflation without triggering a major economic recession.

Wednesdays decision by the Fed underscores that while Fed policymakers are nearing a peak in their benchmark interest rate, they intend to keep it at or near it for the long term. In addition to forecasting one more interest rate hike by the end of the year, Fed officials now expect they will keep interest rates high well into 2024.

They expect only two rate cuts next year, down from the four they forecast in June. They expect the key short-term interest rate to remain at 5.1% at the end of 2024, higher than rates from the Great Recession of 2008-2009 through May of this year.

Fed policymakers intention to keep interest rates high for the long term appears to indicate they remain concerned that inflation may not fall back to their 2% target anytime soon. Successive interest rate hikes by the Federal Reserve had been expected to cause widespread layoffs and an economic recession. However, the job market and economy have remained resilient, adding to the confusion in the forecasts.

"We still have a long way to go to get inflation below 2 percent on a sustained basis," Fed Chairman Jerome Powell said at a press conference. "We have seen progress and we welcome it, but we need to see more progress" before concluding that rate hikes should end.

At the same time, Powell said he was confident that the rate hike cycle was nearly over: "I think were pretty close to where we need to be."
Dongguan Jianpeng Intelligent Technology Co., Ltd
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