U.S. Fed kept rates at record high

In a recent decision, the Federal Reserve opted to maintain interest rates at the highest level in 22 years but signalled a potential end to its ongoing rate-raising efforts. The central bank’s quarterly forecasts revealed three potential cuts to its key short-term rate for the upcoming year, with no further increases anticipated. 

Despite this stance, Federal Reserve Chair Jerome Powell emphasised during post-decision remarks that the possibility of rate increases had not been completely ruled out, pending further developments in the economic landscape.

The Federal Reserve’s move comes after a series of 11 rate hikes since March 2022, bringing rates to a range of 5.25% to 5.5%. These adjustments were made in response to the fastest inflation experienced in four decades.

The central bank’s latest forecasts also indicated an expectation for inflation, excluding fuel and food, to decrease to an annual rate of 2.4% by the end of the next year, down from an estimated 3.2% in the current quarter. The decision reflects the Fed’s ongoing efforts to navigate the economic challenges posed by inflation while considering the broader economic context.