DECEMBER 18, 2023 – THE FED KEEPS RATES STEADY, HINTS AT CUTS IN 2024
As expected, the Fed kept interest rates steady at their last meeting of 2023. Slowing inflation has changed the Fed’s focus from raising rates, to determining when it would be appropriate to lower rates from their 22-year high. Fed Chair Jerome Powell is concerned about causing unnecessary harm to the economy by keeping rates high for too long.
Officially, the Fed has left the door open for raising rates again. Powell said, “It is far too early to declare victory and there are certainly risks.” But later in the meeting, the Fed suggested they have turned their attention to rate cuts since the inflation rate has fallen much faster than they expected. New projections show three rate cuts are anticipated in 2024.
The US economy has stabilized as supply chain issues have abated, and workers have been joining the workforce causing wages to stop rising. The unemployment rate is holding below 4 percent.
The European Central Bank and the Bank of England both met last week and kept rates unchanged. They are shifting to position themselves to handle changes as worldwide inflation seems to have abated. Investors expect the ECB to cut rates as much as 1.5 percent next year.