halv#LatestNews: Fed Sets Interest Rates Stable and Focuses on Reducing Purchases
In its latest decision, the Fed decided to keep interest rates stable. Unanimously, they will also continue to reduce purchases, demonstrating a commitment to prudent monetary policy.
Although economic growth slowed to match the previous quarter's pace, the unemployment forecast remained at 4.1% for 2024. Although inflation fell over the past year, the Fed noted rates remained high.
The Fed's interest rate outlook for 2025 and 2026 shows a decrease to 3.6% and 2.9% respectively. Fed officials also indicated an evaluation of the possibility that additional tightening would be needed.
The forecast rate cut of 75 basis points in 2024, which was reduced to 4.6%, reflects efforts to maintain economic stability. Fed officials' view of interest rates by the end of 2024 is 4.6%, slightly below the current policy rate.
In market reaction, Fed swaps were discounted by 130bp in 2024, indicating a more prudent market understanding of monetary policy. Despite this, no policymaker expects policy interest rates by the end of 2024 to exceed current levels. Furthermore, Fed officials highlighted the importance of assessing the scope for additional tightening in light of changing economic conditions.
