Powell (Fed) predicts interest rates will be reduced in 2024


News Team

The president of the United States Federal Reserve (Fed), Jerome Powell, has announced that the institution will maintain interest rates in the current range of 5.25% to 5.5% for the fourth consecutive meeting. However, Powell has indicated that the reference rate is likely at its peak and will decrease this year.

Powell has emphasized the need for caution in relaxing the restrictive tone too soon or too late. The Federal Open Market Committee (FOMC) will continue to make decisions “meeting by meeting.”

Powell has also warned that unexpected weakening of the labor market would impact the decision to bring forward the rate cut. Additionally, if inflation turns out to be “stickier or rose,” the downward revision would be delayed.

The statement of the decision adopted indicates that “more evidence is needed to establish confidence that inflation is returning sustainably to the target of 2%.”

The president of the central bank has celebrated that economic growth has remained “vigorous,” despite the fact that only twelve months earlier it was anticipated that a macro deterioration would be necessary to control inflation.

The economy of the United States experienced an annualized growth of 4.9% of its GDP in the third quarter of 2023 compared to 2.1% in the previous section, according to the Bureau of Economic Analysis (BEA).

Regarding the US labor market, it created 199,000 non-agricultural jobs during the last November, which allowed unemployment to be reduced by two tenths, to 3.7%, according to the Bureau of Labor Statistics of the Department of Labor.

The personal consumption expenditure price index, the variable preferred by the Fed to monitor inflation, stood at 2.6% year-on-year in December, the same figure as the previous month. The monthly rate recorded a rebound to 0.2% from the previous negative reading of 0.1%. The underlying variable closed at 2.9%, three tenths less.

Image Source: www.infobae.com

Finance, News, Business

Leave a Comment