Fed confirms unchanged rates but anticipates smaller cuts in 2024

USA Fed alza tassi a massimi da 22 anni Non

(Finance) – No surprises from the Federal Open Market Committeethe monetary policy committee of the Federal Reserve, which today decided to confirm the interest rates within an oscillation band between 5.25% and 5.50%, as widely expected by the market. A decision voted unanimously by President Jerome Powell and the Board.

The FOMC assured that “in assessing the appropriate stance of monetary policy, will continue to monitor the implications of incoming information for the economic prospects” and it is said “ready to appropriately change the direction of monetary policy should risks emerge that could prevent the achievement of the objectives”. “The assessments – it is underlined – will take into account a wide range of dataincluding labor market conditions, inflationary pressures and inflation expectations, as well as financial and international developments.”

Meanwhile, bankers felt that “recent indicators suggest that economic activity expanded at a rapid pace. The increase in places of Work has slowed down in recent months, but stays strongand the unemployment rate remained low, while inflation remains high“. At the same time, “the US banking system is solid and resilient, but tighter credit conditions for households and businesses will likely weigh on economic activity, hiring and inflation.”

In conjunction with the FOMC meeting, the projections of the various participants (the so-called dot plot) on the growth of real GDP, the unemployment rate and inflation in the period between 2023 and 2026 and in the long term. There GDP growth is revised upwards this year at 2.1% from 1.8% estimated in June, to 1.5% in 2024 from the previous 1.1%, and confirmed to 1.8% in 2025 and in the longer term.

As for the disemploymentthe rate is now expected to 3.8% in 2023, to 4.1% in 2024 and 2025, while for the longer term an average of 4% is indicated. The expectations on the inflation they were raised to 3.3% in 2023 and 2.2% in 2025, while a rate of 2.5% is confirmed in 2024., as for core inflation, 3.7%, 2.6% and 2.3% are estimated in 2023, 2024 and 2025 respectively.

This implies confirmation of higher rates for longer. Indications regarding the most appropriate monetary policy indicate rates at 5.6% this year, to 5.1% the next (from 4.6% in June forecasts) ed to 3.9% for 2025 (3.4% in June).

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