Fed leaves interest rates unchanged again, signals three cuts coming next year
BNY Mellon Wealth Management head of equities Alicia Levine and Simplify Asset Management chief strategist Mike Green discuss whether the Fed's inflation strategy is working on 'Making Money.'
The Federal Reserve on Wednesday held interest rates steady for the third straight time, signaling that its nearly two-year battle against high inflation may finally be coming to an end as policymakers forecast a series of cuts in 2024.
The widely expected decision left interest rates unchanged at a range of 5.25% to 5.5%, the highest level in 22 years. But policymakers also opened the door to multiple rate cuts next year amid signs the economy is beginning to slow in the face of tighter monetary policy.
New quarterly economic projections laid out after the meeting show that a majority of Fed officials who participated in the meeting expect rates to fall to 4.6% by the end of 2024, suggesting there will be at least three quarter-point rate cuts next year. Policymakers also penciled in additional rate cuts in 2025 and 2026.
No officials see rates rising further next year.
Traders celebrated the prospect of lower rates, with stocks surging and bond yields falling after the decision. The Dow Jones Industrial Average topped 37,000 for the first time ever.
In a statement released after the meeting, the policy-setting Federal Open Market Committee acknowledged that «inflation has eased over the past year but remains elevated» and said it would watch the economy to see if «any» additional rate hikes are needed — a change that indicates many officials believe further tightening is not necessary at this point.
FED'S FIGHT AGAINST INFLATION IS WEIGHING ON MIDDLE-CLASS AMERICANS
Jerome Powell, chairman of the Federal Reserve, speaks during
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