US Fed Holds Key Rate Steady And Signals Three Cuts Likely In 2024

The US Federal Reserve voted Wednesday to hold interest rates at a 22-year high for the third straight meeting but signaled they expect to make three rate cuts next year

Washington, (APP - UrduPoint / Pakistan Point News - 14th Dec, 2023) The US Federal Reserve voted Wednesday to hold interest rates at a 22-year high for the third straight meeting but signaled they expect to make three rate cuts next year.

The Fed's decision to keep its key lending rate between 5.25 percent and 5.50 percent lets policymakers determine "the extent of any additional policy firming that may be appropriate," the US central bank said in a statement.

The inclusion of the word "any," which was absent in November's decision, was added as "an acknowledgement that we believe that we are likely at or near the peak rate for this cycle," Fed Chair Jerome Powell told reporters.

He added that policymakers had discussed when it would be "appropriate" for the Fed to begin cutting interest rates, while refusing to rule out another hike.

Stock indexes on Wall Street surged after the Fed's decision, with the Dow Jones Industrial Average closing at an all-time high.

The Fed's stance signals a continuation of its long-running battle to slow inflation towards its long-term target of two percent amid a recent flurry of positive economic news.

"The Fed thinks that it is done with rate hikes and is more worried about overdoing it than it was in the past," KPMG Chief Economist Diane Swonk wrote in a note after the rate decision.

"After a period of nearly two years of rapid monetary policy tightening, a pivot to cuts next year seems like the most probable outcome," economists at Wells Fargo told clients.

The Fed, which has a dual mandate to tackle inflation and unemployment, is the first major central bank to unveil its interest rate decision this week.

The European Central Bank (ECB) and the Bank of England will publish their own rate decisions on Thursday, and are also expected to hold rates in the face of slowing inflation.