December 14, 2023

New Delhi, India

Fed Meeting 2023

Significantly, the Federal Reserve opted to keep its key rate unchanged at 5.25% – 5.50 % for the third straight meeting. It demonstrates that the central bank has examined different economic conditions and a dynamic environment before making decisions.

Interest Rate Decision

Fed Chair Jerome Powell presided over the meeting of the Federal Reserve in which all members agreed that the US economy is stable while inflation is easing. This decision was different considering that there were eleven hikes in interest rates since March last year(2022).

Future Rate Cut Projections

Unsurprisingly, the FOMC meeting indicated a more dovish posture and projected at least thrice interest cuts in 2023. Investors were surprised by this more aggressive outlook and the markets responded positively.

Market Reactions

Although there was an expected declaration of no changes in the rates, the unforeseen foretelling of the future rates reduction resulted into remarkable market response. The DJIA was up more than 400 points and crossed over 37,000 for the first time. The U.S. dollar decreased more than 1 percent on a peer basis, while treasuries yield fell sharply.

Rupee vs Dollar: Currency Market Analysis Today

Inflation and Economic Outlook

The central bank recognized that while inflation has slowed down over the last one year, it still persists at high levels. Fed officials will be watching the economy closely and considering if more policy actions are necessary.

Fed Chairman’s Comments

In a press conference, the chairperson, Jerome Powell, emphasized that despite the fall of inflation, joblessness have not risen steeply as some predicted. Feds’ outlook shows that cores inflation will fall in the coming 3 years, ending at 2 percent in 2026.

In this case, the Federal Reserve decision shows that it is weighing its issues concerning inflation as well as support for long run growth rates of economics. The possitive market reaction emphasizes the importance of central banks’ message to guide investors’ expectation right.

Also Read: RBI Announces Sovereign Gold Bond Schemes 2023-24: Series III & IV Details Revealed

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