WASHINGTON (AFP) – The United States (US) Federal Reserve could provide additional clues yesterday about how much it will cut interest rates this year, but it is almost certain to leave its key lending rate unchanged for the time being.
Following two days of debate, the Fed’s rate-setting Federal Open Market Committee (FOMC) will publish its interest rate decision, along with an updated summary of economic projections (SEP) that includes policymakers’ interest rate expectations for 2024 and beyond.
The US central bank has lifted its key lending rate to a 23-year high of between 5.25 and 5.50 percent as part of a long-running battle to bring high inflation back down firmly to its long-term target of two per cent.
Last year, its policy proved to be a success: Inflation eased dramatically from the multi-decade highs seen in 2022, while the US was able to avoid a recession thanks to unexpectedly strong economic growth in quarter after quarter.
But 2024 has been more challenging for the Fed, with the US seeing a small uptick in the pace of monthly inflation – renewing fears that interest rates will have to remain high for longer to bring prices under control.
“Since the start of this year, expectations about 2024 central bank easing have been pared back materially,” economists at JP Morgan wrote in a recent investor note.
