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US Fed holds key lending rate steady, signals cuts in 2024


WASHINGTON: The US Federal Reserve voted Wednesday to hold interest rates at a 22-year high for a third straight meeting and signaled it expects to make three cuts next year.
The Fed’s decision to keep its key lending rate between 5.25 percent and 5.50 percent allows policymakers to 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” is likely to further dampen expectations of another interest rate hike next year.
The widely expected outcome keeps interest rates high as the Fed continues its fight to slow inflation towards a long-term target of two percent — amid a recent flurry of positive economic news.
Headline inflation has continued to decline towards the Fed’s target in recent months, while growth has remained resilient and unemployment stayed close to historic lows.
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.
Alongside its interest rate decision, the Fed also published updated economic forecasts, upgrading its growth outlook for this year and reducing it for 2024. It cut its inflation outlook for both years as well.
Members of the rate-setting Federal Open Market Committee also cut the median projection for interest rates at end-2024 to the midpoint between 4.50 and 4.75. This signals they now expect 0.75 percentage points of cuts.
At 25 basis points per cut, this would translate to three rate cuts next year — one more than most analysts were predicting.

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