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Business News/ News / World/  US Fed holds key lending rate steady: Top five takeaways
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US Fed holds key lending rate steady: Top five takeaways

The US Federal Reserve Wednesday announced its interest rate decision after a two-day FOMC meeting, leaving the key interest rates unchanged for the third time in a row and foresees three rate cuts next year.

US Federal Reserve Chairman Jerome Powell holds a press conference at the end of Monetary Policy Committee meeting in Washington, DC, on December 13, 2023. (AFP)Premium
US Federal Reserve Chairman Jerome Powell holds a press conference at the end of Monetary Policy Committee meeting in Washington, DC, on December 13, 2023. (AFP)

The US Federal Reserve Wednesday announced its interest rate decision after a two-day Federal Open Market Committee (FOMC) meeting, leaving the key interest rates unchanged for the third time in a row and foresees three rate cuts next year.

The Fed's decision to keep its benchmark lending rate between 5.25% and 5.50% gives policymakers time to determine the "extent of any additional policy firming that may be appropriate," the US central bank said in a statement.

Also Read | US Fed Meeting Live Updates: Powell-led FOMC keeps key interest rates unchanged at 5.25-5.50%, signals 3 cuts in 2024

Releasing the FOMC statement, the Federal Reserve said that the recent economic indicators suggest that growth of economic activity has slowed from its strong pace in the third quarter. Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.

Also Read | US Fed Policy: FOMC keeps key rates steady at 22-year high-mark, signals 75 bps of rate cuts from current level in 2024

Here are key takeaways from the Federal Reserve's interest-rate decision and economic forecasts: 

  • The Fed’s policymakers signalled that they expect to make three quarter-point cuts to their benchmark interest rate in 2024. It was the first time since inflation first spiked in 2021 that the Fed has formally acknowledged progress in its fight against accelerating prices.
  • The Fed kept its benchmark rate at about 5.4%, its highest level in 22 years, a rate that has led to much higher costs for mortgages, auto loans, business borrowing and many other forms of credit.
  • The Fed policymakers expect the US economy to grow by 2.6% this year, up from 2.1% in September, before slowing down to 1.4% in 2024.
  • Headline inflation is expected to slow more than previously expected to 2.8% in 2023, before easing to 2.4% in 2024. The Committee also signalled its strong commitment to returning inflation to its 2% objective.
  • The FOMC members also cut the median projection for interest rates at the end of next year to the midpoint between 4.50 and 4.75, signalling they now expect 0.75% points of cuts. 

 

 

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Published: 14 Dec 2023, 01:47 AM IST
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