ECONOMY
Federal Reserve Holds Rates Steady For Third Time, Hints At Cuts In 2024
The Federal Reserve
The Federal Reserve on Wednesday announced it was holding its benchmark interest rate steady for the third straight time, and forecast three possible cuts in 2024, indicating rate hikes may be over.
The central bank maintained the target range for the federal funds rate at 5.25% to 5.5%, a 22-year high, after a series of aggressive hikes since March of last year to combat inflation.
It’s not likely we will hike [again], Fed Chair Jerome Powell said at a press conference, adding that the Fed’s key rate is at or near its peak, leaving open the possibility of another increase.
Though job gains have moderated the labor market remains resilient, and while inflation remains above the Fed’s 2% target, it has showed signs of cooling, coming in at 3.1% in November.
“Inflation has eased from its highs, and this has come without a significant increase in unemployment. Thats very good news,” Powell said, though he added that officials didn’t want to take the possibility of additional hikes off the table.
The Bureau of Labor Statistics reported consumer prices in November were up 3.1% year-over-year, down slightly from 3.2% in October, and well below the 2022 peak of 9.1%. Unemployment, meanwhile, was just 3.7% in November.
The Federal Open Market Committee predicted it would lower its key interest rate by three-quarters of a point in 2024, indicating three typical cuts of a quarter point each.
The prospect of a so-called soft landing, bringing inflation back down to 2% without a significant spike in unemployment, is still uncertain, Powell said.
“This result is not guaranteed, Powell said. It is far too early to declare victory.
TMX contributed to this article.
