The Federal Reserve has maintained its key interest rate for the third time, holding it between 5.25%-5.5%. The Federal Open Market Committee (FOMC) unanimously voted for this decision, citing a resilient economy and easing inflation. Notably, the FOMC members projected at least three rate cuts in 2024, deviating from market expectations of four.
The Dow Jones Industrial Average reacted positively, surging over 400 points. The committee's "dot plot" indicates potential cuts in 2025 and 2026, aiming for a 2%-2.25% fed funds rate.
The Fed's statement hinted at a potential end to interest rate hikes, emphasizing careful consideration for any future tightening. Fed Chair Jerome Powell highlighted decreased inflation and projected core inflation to reach the 2% target in 2026. Despite acknowledging economic slowdown, GDP projections were upgraded for 2023 to a 2.6% annualized growth rate. The Fed maintains a cautious stance amid speculation about its approach during the 2024 presidential election year.
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