OAN’s James Meyers
3:15 PM – Wednesday, December 13, 2023
The Federal Reserve kept interest rate predictions the same on Wednesday for the third time in a row, which could point to signs that inflation could possibly begin to slow down.
Policymakers had just recently forecast a series of cuts in 2024.
The decision left interest rates alone at a range of 5.25% to 5.5%, which is the highest level in 22 years. Lawmakers left the door open to multiple rate cuts next year, with signs showing the economy is beginning to slow down.
Economic projections showed how Fed officials expect rates to fall to 4.6% by the end of 2024, which suggests that there will be at least three quarter-point rate cuts next year.
Additionally, policymakers also said that there will be additional rate cuts in the years 2025 and 2026. However, officials claim that they do not see rates rising further next year in 2024.
After the decision, stocks surged and bond yields fell with the Dow Jones Industrial Average, topping 37,000 for the first time ever.
“We added the word ‘any’ as an acknowledgment that we are likely at, or near, the peak rate for this cycle,” Fed Chair Jerome Powell told reporters at the post-meeting press conference in Washington. “But participants also didn’t want to take the possibility of further hikes off the table.”
The move comes after policymakers raised interest rates 11 times since March 2022, in hopes of lowering inflation.
The higher rates have caused the average rate on 30-year mortgages above 8% for the first time in decades. While economists have claimed that inflation has gone down in recent months, it still remains up 3% compared with the same time a year ago, according to the most recent Labor Department data.
“The major takeaway from the December policy meeting is that the Federal Reserve is forecasting a soft landing, full employment and intends to reduce its federal funds policy rate by at least 75 basis points in 2024 to support the ongoing business expansions,” said Joe Brusuelas, RSM chief economist.
“And from our vantage point that is about the best holiday gift a central banker can bestow upon the investment community, policymakers, and the public.”
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