Is it too early to celebrate ?
Interest rates remain unchanged at 5.25-5.5%, in line with expectations.
Fed believes they are at the peak of interest rate hike cycle and has indicated 3 rate cuts in 2024 and 2 rate cuts in 2025. At the same time, in his speech, Powell also mentioned that they are prepared to tighten further, if appropriate.
While inflation (3.1%) still remains higher than the long term target of 2% and there is a downward pressure on inflation and economic activity, with labour markets showing signs of gradual easing.
December 2023 FOMC projects more accelerated rate cuts in 2024, to 4.6% in 2024 and 3.6% in 2025 as compared to September projections of 5.1% in 2024 and 3.9% in 2025, precisely what has rejoiced the markets. Dow Jones crossed all time high of 37000 further taking the (short run) momentum ahead.
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