Economists claim that the US Federal Reserve has left the door open for one more rate hike before the end of the year after voting unanimously to maintain its benchmark interest rates at 5.25-5.50%.
Despite sustained US inflation rates above the central bank’s target range while the US economy remains robust, the US Fed increased its policy rate by 525 basis points since March 2022 to the current range of 5.25 percent to 5.50 percent.
Following the two-day meeting on September 19 and 20, 12 of the FOMC’s 19 policymakers predicted that another rate hike would be appropriate this year, with the remaining seven voting to keep rates unchanged. The tendency of policymakers to maintain high rates for a lengthy term implies that they are still concerned that inflation may not be declining quickly enough to meet their objective of 2%. By year’s end, the inflation rate is expected to fall to 3.3%, according to the Summary Economic Projections (SEP).
In addition, authorities increased their forecast for GDP growth in 2023 from 1 percent to 2.1%.Compared to the 4.5 percent level observed in June, the unemployment rate, which is now at 3.8%, is predicted to peak at 4.1% in 2024 and then remain stable through 2025. In his speech on monetary policy, US Federal Reserve Chair Jerome Powell noted that there is still a “long way to go” before the policymakers’ goal inflation rate of 2% can be sustained.
“The US Federal Reserve’s decision to delay raising interest rates, albeit expected, might put markets around the world on edge. The US still has high inflation, and other economic indicators are not yet showing much evidence of a slowdown. US 10-year yields of 4.472 percent and 2 year yields of 5.181 percent show the anticipation that additional rate hikes may be forthcoming before the year’s end” According to Naresh Tejwani, Strategic Advisor to Abans Group,
