As expected by the market, monetary policymakers at the US Federal Reserve kept interest rates unchanged and now expect interest rates to remain high for longer.
The message was reinforced by Central Bank Chairman Jerome Powell, who confirmed in a conference following the conclusion of the meeting the readiness to ““Raise interest rates further if appropriate” and “maintain monetary policy at restrictive levels” until convincing evidence emerges that inflation is falling in a sustainable manner.
After the new forecasts from Federal Reserve policymakers became known, North American stock markets, which traded with intraday volatility, closed the session in the red. The Standard & Poor’s 500 index fell 0.94% to 4,402.20 points, the Dow Jones Industrial Average fell 0.22% to 34,440.88 points, and the Nasdaq technology index fell 1.53% to 13,469.13 points. The Fed expects a new increase in interest rates later this year, and according to a map that shows how each central bank representative estimates changes in interest rates, the forecast now is that interest rates next year will be in a range between 4.6% and 5%. 4%. % (higher than the 4.4% and 5.1% expected at the June meeting). For 2025, the value has also been revised upwards, with the Fed placing interest rates in a range of 3.4% to 4.9%.
The general idea conveyed by Powell is that the Fed needs to see “further progress” in inflation to be convinced that interest rates are at the right level and that the monetary authority is in a position to “proceed cautiously.” He said a soft landing was possible, but warned that “failing to restore price stability” would be a mistake.
The Federal Reserve’s economic outlook for the North American economy, also released today, was more optimistic. The central bank now expects growth of 2.1% this year, more than double the 1% estimated in June. However, when it comes to inflation, there is greater pessimism.
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