THE Fed kept its monetary policy unchanged as expected, but signaled one more hike by the end of the year as well as fewer interest rate cuts than initially estimated for next year.

The new pause in interest rate hikes was accompanied by tough rhetoric, leaving the door open for further rate hikes by the end of the year and signaling that tight monetary policy will remain in place for longer than expected.

As he announced at the June meeting, the monetary policy makers of USA they still see the 5.50% to 5.75% level as the peak of interest rate hikes, i.e. 25 basis points above today’s level.

The Fed’s new forecast released today suggests that interest rates will fall by only half a percentage point in 2024 compared to the one full percentage point previously forecast at the June meeting. This means the US central bank is projecting an inflation rate of 3.3% by the end of the year, 2.5% next year and 2.2% by the end of 2025.

“Inflation remains high,” the Fed’s statement said, including new forecasts that point to a stronger economy and labor market than its previous forecasts, maintaining the prospect of a soft landing.

For more at moneyreview.gr