The Federal Reserve (U.S. central bank) kept interest rates unchanged on Wednesday and indicated in new economic forecasts that the historical tightening of U.S. monetary policy has likely reached its end, with borrowing costs expected to decrease in 2024. Federal Reserve Chairman Jerome Powell stated on Wednesday that the central bank has likely finished raising interest rates but left the option open for further increases if necessary. He added in a press conference after the recent Federal Open Market Committee meeting, "We believe that the interest rate has peaked or is close to peaking." He further stated, "We are prepared to tighten policy further if appropriate," noting that while the bank officials "do not see it as likely to be appropriate to increase interest rates further, they do not want to rule that possibility out if needed."
In a new statement regarding monetary policy, Federal Reserve officials paid clear attention to the fact that inflation "has slowed over the past year." They mentioned that they will monitor the economy to determine whether any further interest rate increases are necessary, directly suggesting that another hike may not be needed following the sharp tightening over the months. Seventeen out of 19 Federal Reserve officials expect interest rates to decrease by the end of 2024 from their current levels, with the current average forecast indicating a reduction of 0.75 percentage points from the current range of 5.25% to 5.50%. None of the officials expect an increase in interest rates by the end of next year.
