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
Disclaimer:
CurrencyVeda provides this news article for informational purposes only. We do not offer investment advice or recommendations. Before making any investment decisions, please conduct thorough research, consult with financial experts, and carefully consider your financial situation, risk tolerance, and investment goals. Investing in the stock market carries risks, and it’s essential to make informed choices based on your individual circumstances. CurrencyVeda is not liable for any actions taken based on the information provided in this article
