March 21, 2023
New Delhi, India
FOMC Meeting Highlights
The US Federal Reserve, led by Chairman Jerome Powell, concluded its two-day Federal Open Market Committee (FOMC) meeting by maintaining the benchmark interest rates at 5.25-5.50%, marking the fifth consecutive meeting with no changes. Despite leaving rates steady, the FOMC signaled its anticipation of three rate cuts in 2024, reflecting concerns over persistent inflation.
The decision to hold rates came alongside updates to economic forecasts, with a significant upward revision to the US growth outlook for 2024 to 2.1%, up from 1.4% forecasted in December. Additionally, while the headline inflation forecast remained unchanged, the projection for annual “core” inflation, excluding energy and food prices, was slightly raised to 2.6%.
Fed officials emphasized the importance of gaining greater confidence in inflation moving sustainably towards the two per cent target before considering rate reductions. The median projection for interest rates by the end of 2024 remained between 4.50 and 4.75, indicating expectations of potential rate cuts later in the year.
Following the announcement, US markets reacted positively, with the S&P 500 surpassing 5,200 and the Nasdaq 100 rising approximately one per cent. The Dow Jones Industrial Average also saw gains, climbing by 0.8%. Meanwhile, the dollar index, measuring the US currency against major trading partners, experienced a slight decline.
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