The US Central Bank kept interest rates unchanged, as was expected, however, announcing that it intends to proceed with three interest rate cuts before the end of the year.

Following its two-day meeting, the Fed said it is keeping the benchmark interest rate in the range between 5.25% – 5.5%, levels it has been at since July 2023.

Fed officials reiterated that three rate cuts are expected by the end of 2024 (each of 0.25%). Essentially, these will be the first reductions in US interest rates since the outbreak of the coronavirus in March 2020, when interest rates began to rise.

It is noted that at current levels American interest rates are at a high of more than 23 years.

The forecast for three interest rate cuts comes from the Fed’s “dot plot”, where the forecasts of the 19 officials who make up the FOMC are collected – anonymously. However, it does not include indications as to when the reductions will take place.

Based on the dot plot, 3 rate cuts are predicted in 2025 – one less than the previous one last December. Also, three more cuts are forecast in 2026 and two more in the distant future, until interest rates reach around 2.6%.

In addition, officials upgraded their GDP estimates this year and now project that the US economy will run at an annual rate of 2.1%, significantly higher than the 1.4% they forecast in December.

As far as unemployment is concerned, the estimates of the officials place it marginally lower than the previous forecast, namely at 4%. It is noted that unemployment for February stood at 3.9%.