The decision has arrived Fed on interest rates. As widely predicted, there will be no shock during the last meeting of 2023 and rates will remain unchanged for the third time in a row, at a 22-year high.
We therefore remain in the 5.25-5.50% range. “The Committee will continue to evaluate additional information and its implications for monetary policy,” the statement said. The objective remains to bring inflation back to the 2% range.
The latest updated data on the US economic situation show a slowdown in growth compared to the third quarter. Job growth has also moderated compared to the beginning of the year and the unemployment rate remains low.
«Recent indicators suggest that growth in economic activity has slowed from the strong pace of the third quarter. Job growth has moderated since the start of the year but remains strong, and the unemployment rate has remained low. Inflation has eased in the last year, but remains high”, this is what we read in the official press release.
Powell reiterated in the conference that the risk of recession for 2024 cannot be ruled out because we are still living in a period of uncertainty. And unfortunately the prospect of bringing inflation to 2% is still distant. According to published forecasts, this will not happen before 2026. However, updated data on macroeconomic and rate projections for the next few years show confidence in the lowering of interest rates starting from 2024 compared to the latest data from September. We will see how investors react to the Fed’s decision to leave everything unchanged.
From 2024, it is likely that the Fed will gradually begin to lower interest rates in its next meetings, putting an end to the restrictive policy that hit the US economy in 2023.
Dot plot: Rates falling 50 basis points in 2024
The forecasts have also been published rates not macroeconomic projections. The good news is that as regards rates, compared to the previous meeting in September, they are expected to fall by 50 basis points in 2024. Compared to 5.1% in September, a decline to 4.6% is now expected. Also decreasing in 2025, from 3.9% to 3.6% while in 2026 it remains unchanged at 2.9%.
Unemployment projections for 2024 remain unchanged at 4.1%, GDP growth is less than 2%. The Fed does not expect inflation to return to 2% before 2026 although it expects inflation to reach 2.1% at the end of 2025.
Fed meeting, live updates
20:56
Powell: «We are satisfied with the progress but we need to see more»
In the conference, Powell reiterated that there is satisfaction with the progress made on inflation and the objective of bringing it to 2% in the coming years. However, there must be others to see the desired results.
20:54
Powell: «Today there is little basis for thinking about a recession but next year the possibility is always there»
Regarding the risk of recession, President Powell said at the conference: “There is little basis for thinking that there is a recession now but next year it cannot yet be ruled out.”
20:42
Powell in conference: «The process of bringing inflation to 2% will still take time»
«The growth of economic activity has slowed significantly. Therefore, considering the progress made and the uncertainties, we are proceeding with caution. We expect the process of bringing inflation to 2% will still take some time. The lower inflation data is welcome, but we will need to see further evidence.” Powell in conference.
20:30
Powell’s lecture begins
The Fed President’s press conference has begun Powell which will illustrate the decision taken at the last meeting and future prospects.
20:21
Dot plot: rate down 50 basis points in 2024
Also published on dot plot with projections for the next few years. Compared to the September meeting when the rate was forecast at 5.1% in 2024, it has now been updated downwards to 4.6%. For 2025 at 3.6% compared to 3.9% and in 2026 it remains unchanged at 2.9%
20:14
Fed statement: restrictive financial conditions will weigh on families and businesses
«Tighter financial and credit conditions for households and businesses will likely weigh on economic activity, hiring and inflation. The extent of these effects remains uncertain. The Committee remains very attentive to the risks of inflation”, the statement continues.
20:11
Fed statement: economic growth slows
«Recent indicators suggest that growth in economic activity has slowed from the strong pace of the third quarter. Job growth has moderated since the start of the year but remains strong, and the unemployment rate has remained low. Inflation has eased in the last year, but remains high”, this is what was written in the official Fed statement on the situation of the US economy.
20:03
Fed decision: rates remain unchanged
Nothing new compared to what was predicted the day before. There Fedin the last meeting of 2023, decided to leave the interest rate unchanged at 5,5%.
19:45
Wall Street also opens weak
While waiting for the Fed, the stock exchange Wall Street it opened weakly. The Dow Jones is unchanged, the Nasdaq rose by 0.19%.
19:30
European stock markets close flat awaiting Fed decision
Waiting for the decision Fed this evening which should leave the interest rate unchanged, European stock markets closed their trading day flat. No leaps either positively or negatively, but a lot of caution. Business Square it closed trading slightly down with -0.15%. In the basket of the Milan Stock Exchange leap of Leonardo (+4.26%), ready to sign an agreement with the Franco-German KNDS to form a joint venture and Amplifier (+3.40%) after the agreement for the acquisition of the Audical Group which certifies the company’s entry into Uruguay.
2023-12-13 20:15:00
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