Today, the Federal Reserve has decided to maintain its benchmark interest rate in a range of 5.25%-5.50%.
The Central Bank expects inflation to fall to 2.4% next year (down from 2.5% forecast in September) and drop further to 2.2% in 2025.
Inflation, which the Fed is trying to cool, continues to drop closer to the central bank’s 2% target.
- The core Personal Consumption Expenditures index (which excludes volatile food and energy prices) was at 3.5% for the month of October (3.7% in September and 4.3% in June).
- The Consumer Price Index on a core basis showed inflation rose 4% in November, the same as in October.
FED is expected to reduce interest rates next year (economic projections suggest the chances of around three quarter point rate cuts in 2024).
Although it has to pursue its goal to reduce inflation at 2%, the Central Bank needs to gradually lower rates so as not to push the brakes too hard on the economy.
FED decision was expected by the market.
Quotations have not been significantly influenced by this news today.