Fed to leave rates unchanged on Sept 20; cut unlikely before Q2 2024
interest rate unchanged at the end of its Sept. 19-20 policy meeting and probably wait until the April-June period of 2024 or later before cutting it, according to economists in a Reuters poll.
Fed Chair Jerome Powell underscored the «higher-for-longer» mantra for rates in a speech at the annual Jackson Hole central banking symposium in August and maintained another rate hike might still be needed to bring inflation down to the 2% target.
But other members of the rate-setting Federal Open Market Committee (FOMC), including some of the more hawkish ones, have raised the possibility of holding off on another rate hike to allow more time to gauge the impact of the cumulative 525 basis points of tightening delivered by the Fed since March 2022.
More than 95% of economists, 94 of 97, in the Sept.
7-12 Reuters poll predicted the U.S. central bank would hold the federal funds rate in the current 5.25%-5.50% range next week, in line with market expectations.
Still, nearly 20% of the economists, 17 of 97, predicted at least one more rate rise before the end of the year, including three who expected one this month.
«Though we continue to expect the Fed to remain on hold at the Sept.
20 FOMC meeting, we would not be surprised to see most officials continue to project one more rate hike by year-end in their updated 'dot plot,'» said Brett Ryan, senior U.S. economist at Deutsche Bank, referring to the interest rate projections released by Fed policymakers on a quarterly basis.
«While there has been meaningful progress to date on inflation… the Fed will not be able to take this for granted.»
Much of the immediate outlook for Fed policy will depend on the release on Wednesday of Consumer Price Index (CPI) data for August.
