December 14, 2023 (MLN): The US Federal Reserve decided to leave interest rates unchanged at 5.25%-5.5% for the third consecutive meeting but indicated cumulative rate cuts of 75 basis points in 2024.
To note, interest rates are at their highest level in 22 years.
This marks the fourth time the Fed has not raised rates in the last 15 meetings.
Along with the FOMC statement, the FED released new projections, wherein it expected the GDP growth to be higher this year, i.e. 2.6% as against 2.1% in the September projection, while in 2024 GDP growth is projected to be 1.4% as against 1.5% in the September projection.
The projections show a significant reduction in PCE inflation, which is forecasted to be 2.8% in 2023 as against 3.4% in September projections. Moreover, it is forecasted to be 2.4% in 2024, 2.1% in 2025, and 2% by the end of 2026.
The median Federal funds rate is now projected to be 4.6% in 2024, down from 5.1% in September's projections, implying 75bps rate cuts.
To recall, the US consumer price index (CPI) for the month of November 2023 rose by 3.1% YoY, as compared to the 3% YoY numbers in October.
Meanwhile, on a sequential basis, US CPI rose by 0.1% MoM as compared to 0% MoM in the previous month.
