Federal Reserve officials did not change interest rates in their final policy decision of 2023. Fed officials have forecasted that they will cut borrowing three times in 2024. This is a sign that the Central Bank is trying to cope with inflation.
Interest rates currently range from 5.25% – 5.5%, where it has been since July of this year. Fed officials have increased interest rates 11 times since March of 2022, and borrowing costs have risen to their highest level in 22 years! Fed officials have kept a policy of keeping interest rates the same since July.
Leaving interest rates unchanged since July has helped policymakers assess if the rates are high enough to ensure that inflation will reach the Fed’s two percent goal within the preferred time range. On Wednesday (12/13/23), Jerome H. Powell, the Fed Chair, said that fed officials do not expect to raise interest rates again soon. In a press conference, policymakers further stated that they expect to lower the borrowing costs to 4.6% by the end of 2024. This forecast implies that Fed officials will make three quarter-point rate cuts in 2024.
The Fed is responsible for maintaining stable prices and maximum employment in the country. However, the two economic goals are challenging and nearly impossible to achieve if the right policies are not implemented.
