ALBAWABA – The United States (US) Federal Reserve (Fed) will likely pin US interest rates at its current level at the end of its meeting today, Wednesday, for the remainder of the year and the beginning of 2024.
Both Bloomberg and Agence France-Presse (AFP) expect the Fed to hold US interest rates steady for a third consecutive meeting, while pushing back against rate cut expectations for March.
The Federal Open Market Committee is poised to keep rates at the current range of 5.25-5.5 percent at the end of its two-day policy meeting ending Wednesday.
US interest rates are at a 22-year high as of July.
The Fed, which has a dual mandate to lower inflation to two percent while also tackling unemployment, according to AFP, had repeatedly reaffirmed that another rate hike is not off the table.
Economists surveyed by Bloomberg expect the median projection will show two rate cuts next year and five more in 2025, but there’s a high degree of uncertainty. Some Fed watchers see the FOMC penciling in a full percentage point of cuts in 2024 while others see no cuts at all, Bloomberg reported.
The Fed has a dual mandate to lower inflation to two percent while also tackling unemployment by adjusting US interest rates - Shutterstock
The rate decision and an accompanying statement will be released at 2 p.m. in Washington. Chair Jerome Powell will hold a press conference 30 minutes later.
Despite the Fed's aggressive policy of monetary tightening, the world's biggest economy grew at an annualized rate of 5.2 percent in the third quarter.
Headline consumer inflation in the US fell further last month, according to fresh data published Tuesday, while the unemployment rate has remained close to historic lows.
Meanwhile, a key US inflation gauge, the Consumer Price Index, is expected to have remained flat in November.
The data suggest the Fed is on track for a so-called "soft landing," a rare feat in monetary policy when high interest rates bring down inflation without plunging the country into a damaging recession.
But the US economy is not there yet, AFP confirmed, and so interest rates are likely to remain high for the next few months.
The Fed's decision later today will kick off a flurry of releases by key central banks on both sides of the Atlantic, with the ECB and the Bank of England due to announce their rate decision on Thursday. Both are expected to pin interest rates further.
The language in all of this week's decisions will either fuel market speculation of interest rates cuts in early 2024, or reinforce the notion that rates must stay higher for longer to effectively tackle inflation.
