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US Federal Reserve Holds Benchmark Rate Steady, Trims Outlook for 2024

14/12/2023 03:16

According to CoinDesk, the U.S. Federal Reserve held its benchmark fed funds rate range steady at 5.25%-5.50% on Wednesday, as expected. However, it trimmed its rate outlook for year-end 2024 to 4.6% from 5.1%. The central bank's statement noted that tighter financial and credit conditions for households and businesses are likely to impact economic activity, hiring, and inflation, but the extent of these effects remains uncertain. In addition to the interest rate announcement, the Fed released its quarterly update of economic projections. It now expects 2023 to end with a core inflation rate of 3.2%, down from the 3.7% expected three months earlier. The end rate for 2024 is now seen at 2.4%, compared to the previous 2.6%. Real GDP growth for 2024 has been trimmed to 1.4% from 1.5%. The Fed now sees its fed funds rate ending 2024 at just 4.6%, down from the 5.1% expected three months earlier, suggesting 75 basis points of rate cuts next year. Following the announcement, the price of bitcoin (BTC) increased by just under 1% to previous Wednesday gains, now higher by 2.2% at $42,370. Traditional markets saw rates tumble, with the 10-year Treasury yield down 12 basis points to 4.08%, its lowest level since August. U.S. stock market averages moved to session highs, with the S&P 500 up 0.6%. Fed Chair Jerome Powell held a post-meeting press conference at 2:30 pm ET, where market watchers looked for additional clues about the future path of monetary policy. Prior to the meeting, markets did not expect any moves at the Fed's late January meeting, but nearly 50% anticipated a rate cut at the following meeting in March, according to the CME FedWatch tool.

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