Federal Reserve officials said they are leaving the central bank’s key interest rate unchanged at the current range of 5.25% to 5.5%, a decision expected by economists as recent inflation data showed prices are still rising faster than the Fed would like. However, the Fed has its plans for interest rates to be pegged at 4.6% at the end of this year. That’s more than three-quarters of a percentage point lower than it is now. Given that the Fed will meet six more times this year, it is almost certain that there will most likely be a three-quarters of a percentage point cut between May and December. The US government has also said that while inflation is falling, it “does not expect it to be appropriate” to cut rates until the bank is confident that inflation is moving towards its 2% target.
The US Federal Reserve sees no signs of a recession on the horizon. Neither this year nor the year after. The Federal Reserve’s policy committee of 19 officials released new economic data last week showing that they now expect economic growth in 2024, 2025 and 2026 to be even stronger than previously thought. “The economy is strong, the labor market is strong and inflation has come down,” Fed Chairman Jerome Powell said. “We are firmly committed to returning inflation to our 2% target,” the Fed’s projection assumes that won’t happen until 2026.
Corporate profits have been robust , the stock market continues to break record after record and America may be in the midst of a strong productivity boom that could boost growth without fueling inflation. And even though interest rates are at their highest levels in two decades, the economy continues to show remarkable resilience. Economists say that strength could persist in the years ahead. U.S. gross domestic product is the broadest measure of economic performance, posting strong annualized growth of 3.2% in the fourth quarter . The previous quarter even had growth of 4.9%. The Fed currently projects the economy to grow at a 2.1% pace in the first three months of 2024 and 2% in the next two years.