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Fed Keeps Rates Steady, Signals Possible Cuts Next Year

Fed Keeps Rates Steady, Signals Possible Cuts Next Year

December 15, 2023

As expected, the Fed held interest rates steady at their last two-day meeting of 2023.

This marks the third consecutive meeting where the Fed has not raised rates. The Fed signaled that inflation is improving more rapidly than it had anticipated.

While Fed Chairman Powell allowed for the possibility of further rate hikes, inflation data trending toward his 2 percent target suggests that we may have seen the last hike in this cycle.

Additionally, Fed officials have opened the door to rate cuts next year and projected they would lower rates by three-quarter points to around 4.6 percent by the end of 2024.

Are we heading for the proverbial “soft landing,” where higher rates do the job of cooling inflation without throwing the economy into recession? Maybe.

If nothing else, the December meeting marks a pivot in Fed policy regarding rates for the current cycle.