Federal Reserve signals rate cuts in 2024
The Federal Reserve kept the fed funds rate steady at 5.25%-5.5% for the third consecutive meeting in December 2023, in line with expectations, but also indicated cuts of 75bps, i.e. 0.75% in 2024. An official confirmation of the rumors that had spread in recent weeks and which had led to a stock market rally and in the values of various assets.
Policymakers said recent indicators suggested economic growth had slowed and job growth had moderated but remained strong, and the unemployment rate remained low. Inflation has declined over the past year but remains high.
The central bank also released new projections. GDP growth is forecast higher this year (2.6% versus 2.1% in the September projection), but slightly lower in 2024 (1.4% versus 1.5%). Furthermore, PCE inflation was revised downwards for both 2023 (2.8% versus 3.3%) and 2024 (2.4% versus 2.5%) , as was inflation Core PCE which is seen at 3.2% in 2023 (versus 3.7%) and 2.4% (versus 2.6%) next year.
Unemployment projections remained stuck at 3.8% for 2023 and 4.1% for next year. The so-called “dot plot” shows that the median year-end 2024 projection for the federal funds rate fell to 4.6% from the 5.1% seen in September, about the same as the cut expected in the latest Fed votes Here is the ravico with the interest rate movements of the last 25 years,
So the market forecasts are confirmed semi-officially. The latest data on unemployment were not particularly positive and this perhaps convinced Jerome Powell, in the end, to reveal himself.
Now that the Fed is signaling cuts, what will the ECB do, as it finds itself facing a much more complex situation?
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The article The Federal Reserve signals rate cuts in 2024 comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-federal-reserve-segnala-tagli-sui-tassi-nel-2024/ on Thu, 04 Jan 2024 07:00:08 +0000.