Worthy Christian News > US News > Fed Maintains Interest Rates at 22-Year High, Signals Three Cuts in 2024

Fed Maintains Interest Rates at 22-Year High, Signals Three Cuts in 2024

by Emmitt Barry, Worthy News Correspondent

(Worthy News) – The Federal Reserve announced Wednesday that interest rates will continue at their peak levels since early 2001. However, it laid the groundwork for several rate cuts coming in 2024. The federal interest rate will remain within the range of 5.25% to 5.5%.

During a press conference, Federal Reserve Chair Jerome Powell emphasized the importance of maintaining steady interest rates, focusing on avoiding potential damage to the economy by keeping rates excessively high as inflation decreases. “We’re aware of the risk that we would hang on too long,” he said. “We’re very focused on not making that mistake.”

Powell’s recent comments and updated forecasts indicate that Fed officials expect three rate cuts next year, representing a significant shift in position. For over a year, Powell had consistently cautioned that rates would be raised as necessary to curb inflation, even at the risk of causing a recession. Just two weeks ago, he stated that discussing the timing of potential rate decreases was premature.

However,  a report by the Bureau of Labor Statistics published new data on Tuesday indicating a decrease in inflation. Additionally, the updated figures revealed that wage increases have outpaced inflation over the past year.

Powell has stated that the Federal Reserve aims to maintain inflation at an annual rate of 2%. As of November, it stood at 3.1%, significantly lower than the peak of over 9% inflation the U.S. encountered in mid-2022.

“Inflation has eased from its highs, and this has come without a significant increase in unemployment. That’s very good news,” Powell said.

Market expectations were mainly in line with the decision to maintain the current rates, potentially concluding a cycle that included 11 rate hikes, elevating the federal funds rate to its highest point in over 22 years. As a result, the Dow Jones Industrial Average surged over 400 points, crossing the 37,000 mark for the first time.