Fed to Hold Interest Rates Steady, Indicate Cuts in 2024
The Federal Reserve announced they will keep interest rates the same for the third time in a row and indicated that cuts will be coming in 2024.
Although still at a 22-year high, the decision shows the Fed believes the US economy is in a solid place and the fight against inflation is working.
Thus, the borrowing rates will remain between 5.25%-5.5%.
The Federal Reserve has increased interest rates 11 times since March 2022 to fight inflation.
After inflation reached a 40-year high of 9.1% in June of 2022, it has since cooled to 3.14%.
As a result of high interest rates and a larger supply of oil, inflation rates have finally fallen in 2023. However, with a target goal of 2% inflation, there is more work to be done until the Fed drops rates.
While many expect the Fed to begin to cut rates in the first quarter of 2024, Fed Chair Jerome Powell has not ruled out future rate hikes.
Despite this, Wall Street believes cuts will happen sooner than later, and as a result, the Dow Jones rallied to an all-time high following the Fed decision.
During Wednesday's press conference, Powell stated that the Fed’s “policy rate is likely at or near its peak.”
Additionally, top Fed officials have signaled that cuts will be beginning as soon as March 2024, and committee members have “penciled in at least three rate cuts in 2024.”
By the end of 2026, committee members hope for interest rates to be around 2%-2.5% following another two years of full-point percentage cuts.
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