US Fed Holds Interest Rates Steady For Seventh Consecutive Time- Details

The Fed's updated economic forecasts indicate that inflation is expected to remain stubbornly high through 2024, while unemployment is projected to increase slightly in 2025.
fomc, US Fed, Interest Rates, Steady, Inflation Markets

US Fed Holds Interest Rates Steady For Sixth Consecutive Time- Details (image source: Times Now Digtal)

US Fed: The US Federal Reserve, led by Chairman Jerome Powell, has decided to keep interest rates unchanged for the Seventh consecutive time. The rate-setting committee maintained the target range for the federal funds rate at 5.25 to 5.50 percent, aligning with market expectations. The committee emphasized that it would carefully assess incoming data, the evolving economic outlook, and the balance of risks before making any further adjustments to the target range.

Economic Forecasts and Future Rate Cuts

The Fed's updated economic forecasts indicate that inflation is expected to remain stubbornly high through 2024, while unemployment is projected to increase slightly in 2025. The central bank now anticipates faster rate cuts beginning in 2025, with rates expected to fall to 3.1 percent by the end of 2026. The committee also projected at least one rate cut before the end of 2024, reflecting an adjustment to the economic outlook, according to a New York Times report.

May CPI Data and Market Reaction

Earlier on Wednesday, the Consumer Price Index (CPI) for May was released, showing a 3.3 percent increase from a year earlier. This was slightly below economists' forecast of 3.4 percent and a decrease from April's reading. Month-over-month, May prices remained unchanged, providing a current snapshot of inflation that could influence the Fed's projections for the remainder of the year. This data has the potential to pave the way for earlier interest rate cuts.

Market Performance

Following the release of the CPI data and the Fed's decision, major market averages reacted positively. By approximately 1:50 p.m. Eastern time, the S&P 500 had gained about 1 percent, while the Nasdaq surged nearly 1.8 percent. Both indexes reached fresh all-time highs during the session, reflecting investor optimism about the economic outlook and potential future rate cuts.
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