AGL 40.20 Decreased By ▼ -1.30 (-3.13%)
AIRLINK 129.11 Increased By ▲ 1.11 (0.87%)
BOP 6.60 Increased By ▲ 0.34 (5.43%)
CNERGY 4.03 Decreased By ▼ -0.10 (-2.42%)
DCL 8.45 Increased By ▲ 0.01 (0.12%)
DFML 41.25 Increased By ▲ 0.56 (1.38%)
DGKC 87.00 Decreased By ▼ -0.90 (-1.02%)
FCCL 33.35 Decreased By ▼ -0.75 (-2.2%)
FFBL 65.90 Decreased By ▼ -0.43 (-0.65%)
FFL 10.54 Decreased By ▼ -0.02 (-0.19%)
HUBC 110.70 Increased By ▲ 2.00 (1.84%)
HUMNL 15.23 Increased By ▲ 0.77 (5.33%)
KEL 4.78 Increased By ▲ 0.13 (2.8%)
KOSM 7.83 Increased By ▲ 0.50 (6.82%)
MLCF 41.90 Decreased By ▼ -0.82 (-1.92%)
NBP 60.50 Decreased By ▼ -0.34 (-0.56%)
OGDC 182.80 Increased By ▲ 3.83 (2.14%)
PAEL 25.36 Decreased By ▼ -0.34 (-1.32%)
PIBTL 6.26 Increased By ▲ 0.20 (3.3%)
PPL 147.81 Increased By ▲ 1.66 (1.14%)
PRL 24.56 Decreased By ▼ -0.35 (-1.41%)
PTC 16.24 Increased By ▲ 0.10 (0.62%)
SEARL 70.50 Increased By ▲ 0.30 (0.43%)
TELE 7.30 Increased By ▲ 0.08 (1.11%)
TOMCL 36.30 Increased By ▲ 0.10 (0.28%)
TPLP 7.85 Increased By ▲ 0.01 (0.13%)
TREET 15.30 Decreased By ▼ -0.29 (-1.86%)
TRG 51.70 Increased By ▲ 1.34 (2.66%)
UNITY 27.35 Increased By ▲ 0.45 (1.67%)
WTL 1.23 Decreased By ▼ -0.01 (-0.81%)
BR100 9,842 Increased By 47.4 (0.48%)
BR30 30,036 Increased By 389.6 (1.31%)
KSE100 92,520 Increased By 499.1 (0.54%)
KSE30 28,786 Increased By 121.7 (0.42%)

WASHINGTON: The Federal Reserve held interest rates steady on Wednesday and signaled in new economic projections that the historic tightening of U.S. monetary policy engineered over the last two years is at an end and lower borrowing costs are coming in 2024.

In a new policy statement, U.S. central bank officials took explicit account of the fact that inflation “has eased over the past year,” and said it would watch the economy to see if “any” additional rate hikes are needed - implying directly that, after months of aggressive tightening and a bias towards moving rates higher, they may not need to move higher again.

Indeed, a near unanimous 17 of 19 Fed officials project that the policy rate will be lower by the end of 2024 than it is now - with the median projection showing the rate falling three-quarters of a percentage point from the current 5.25%-5.50% range. No officials see rates higher by the end of next year.

US Fed likely to pause rate hikes despite higher inflation

For an institution that has been reluctant to declare victory over inflation that spiked last year to a 40-year high, the updated projections and new statement mark a notable shift in tone and outlook.

Headline personal consumption expenditures inflation is seen ending 2023 at 2.8%, and falling further to 2.4% by the end of next year, within striking distance of the Fed’s 2% target.

That comes at little comparative cost in terms of higher joblessness, with the unemployment rate seen rising from the current 3.7% to 4.1%, the same rate projected in September, while economic growth is seen slowing from an estimated 2.6% this year to 1.4% over 2024.

While officials remain free to raise the Fed’s benchmark overnight interest rate again in coming months if inflation resurges, that seems increasingly unlikely given the recent performance of inflation that has edged steadily towards the central bank’s target.

US Fed official ‘encouraged’ by progress against inflation

The economic projections, as a whole, cling closely to the “soft landing” scenario that has become the base case for U.S. central bankers hoping that inflation continues to slow without a recession and sharp rise in unemployment.

Investors ahead of this week’s meeting bet that the Fed would cut its policy rate by a full percentage point by the end of next year, putting the central bank’s new projections nearly in line with the views of financial markets.

Fed Chair Jerome Powell is scheduled to hold a press conference at 2:30 p.m. EST (1930 GMT) to elaborate on the meeting.

After raising the policy rate by 5.25 percentage points since March of 2022 in one of the swiftest Fed reactions to rising inflation, the central bank has now kept the policy rate on hold since July as inflation edges closer to its target.

Comments

Comments are closed.