Fed keeps rates steady, but sees more rate cuts for 2024
Investing.com — The Federal Reserve kept interest rates steady on Wednesday for the third straight meeting, and signaled deeper cuts for next year as inflation is expected to cool faster than initially anticipated.
The Federal Open Market Committee, or FOMC, kept its benchmark rate at a more than two-decade high range of 5.25% to 5.50%.
The Fed removed its forecast for an additional hike this year, projecting that rates have now peaked at 5.4%, and tacked on a further rate cut for next year.
Fed members estimated that the benchmark rate will fall to 4.6% next year, suggesting three rate cuts in 2024, from a prior projection of 5.1%, or two rate cuts. For 2025, Fed members now expects the central bank to lower rates to 3.6% from 3.9% previously.
The move to forecast a step up in the number of rate cuts for next year was supported by projections that inflation will fall at a quicker pace than previously anticipated.
The Fed sees core PCE, which excludes food and fuel costs and is considered a better gauge of underlying inflation, at 3.2% this year, from a prior estimate of 3.7%. Inflation is expected to fall further next year to a 2.4% pace, down from a prior forecast of 2.6%. In 2025, price growth is seen at 2.2%, below a previous estimate of 2.3%.
In the press conference following the gathering, Federal Reserve Chairman Jerome Powell cautioned that it was too early to say that the central bank had achieved its goal of taming elevated inflation.
«No one is declaring victory. That would be premature, and we can't be guaranteed in this progress,» Powell said.
The Fed's outlook on the labor market was largely unchanged from the September meeting, while the unemployment rate was forecast to rise to 4.1% next year
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