Fed leaves base rate unchanged

Federal Reserve officials left interest rates unchanged in their final policy decision of 2023 and forecast that they will cut borrowing costs three times in the coming year, a sign that the central bank is shifting toward the next phase in its fight against rapid inflation, Report informs referring to The New York Times.

Interest rates are set to a range of 5.25 to 5.5 percent, where they have been since July. After making a rapid series of increases that started in March 2022 and pushed borrowing costs to their highest level in 22 years as of this summer, officials have held policy steady for three straight meetings.

That patient stance has given policymakers time to assess whether interest rates are high enough to weigh on the economy and ensure that inflation will slow to the Fed’s 2 percent target over time — and increasingly, slowing inflation and a cooling job market have convinced them that policy is in a good place. Jerome H. Powell, the Fed chair, said during his news conference Wednesday that officials no longer expected to raise interest rates again.

In fact, Fed policymakers projected on Wednesday that they would lower borrowing costs to 4.6 percent by the end of 2024, down notably from their previous 5.1 percent estimate, which was released in September. The forecast implies that officials will make three quarter-point rate cuts next year.