Fed holds rates and eyes 2024 cuts, stocks and bonds jump - what's moving markets

investing.com:

Investing.com -- The Federal Reserve leaves interest rates unchanged following its final two-day policy meeting of 2023. However, officials hinted that they may start to roll out cuts next year, fueling a sharp rally in stocks and bonds. Attention now turns to central banks in Europe, where traders will be curious to see how much policymakers in the region push back against hopes that they will take a dovish position similar to the Fed.

1. Fed keeps rates steady and signals 2024 rate cuts

The Federal Reserve has kept interest rates steady at a more than two-decade high, but indicated that it would begin to slash borrowing costs next year.

The Federal Open Market Committee unanimously voted to hold rates at a range of 5.25% to 5.50% on Wednesday, although the U.S. central bank's quarterly «dot plot» — an outline of future rate expectations — showed that policymakers were factoring in three quarter-point cuts in 2024, a more dovish outlook than prior estimates.

In closely-watched comments following the decision, Fed Chair Jerome Powell also acknowledged that officials are «likely at or near the peak rate for this cycle.»

Powell added that the Fed, which has embarked on an unprecedented run of rate hikes in a bid to quell elevated inflation, is now «getting back» to a point where it is aiming to prevent unemployment from spiking as well. The remark suggests that while the Fed may not be completely satisfied with the current pace of price growth, it could be starting to shift its focus on to preventing a more restrictive policy stance from sparking a recession in the broader economy.

2. Futures rise after main U.S. averages soar

U.S. stock futures edged higher on Thursday, suggesting an extension in steep gains posted in