Fed Holds Rates Steady, Indicates 3 Cuts Coming in 2024 While Seeing Core PCE Falling to 2.4%

Fed Holds Rates Steady, Indicates 3 Cuts Coming in 2024 While Seeing Core PCE Falling to 2.4%

UTC by Steve Muchoki · 3 min read
Fed Holds Rates Steady, Indicates 3 Cuts Coming in 2024 While Seeing Core PCE Falling to 2.4%
Photo: Depositphotos

With the US inflation having eased without significant unemployment, the Fed unanimously agreed to hold the borrowing rate between 5.25 and 5.5 percent for the third consecutive time.

The United States stock market recorded a profitable day led by the Dow Jones Industrial Average (DJIA) and the S&P 500, after several high-impact news released by the Federal Reserve and the Bureau of Labor Statistics on Wednesday. As was largely expected, the United States Federal Reserve commissioners unanimously voted to hold the borrowing rate in a targeted range between 5.25 percent and 5.5 percent, thus signaling imminent rate cuts next year. Notably, Federal Reserve Chairman Jerome Powell indicated that the overall inflation has significantly declined without major unemployment spikes, which led to the decision to hold the interest rates unchanged after a period of sustained hikes in the past two years.

The Fed chair added that recent indicators point to slowed economic growth without significantly hurting the employment rate.

“Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated,” the Fed noted.

Meanwhile, the Fed chair applauded the US banking system for recovering through the recent crisis triggered by the notable rise in neo banks and web3 industry. As a result, the Fed highlighted that it will begin a series of loosening monetary policies in the coming years to support economic growth. Notably, the Fed official issued an inflation estimate of 3.2 percent by the end of 2023, about 2.4 percent in 2024, 2.2 percent in 2025, and finally the target of 2 percent in 2026.

US Interest Rate Cut in 2024 Is a Political Stunt

The 2024 United States presidential election has significantly impacted the stock market performance in the past year as investors realign their portfolios. Recent political poll shows President Joe Biden has suffered negative sentiment, especially on the economic performance. In a bid to ensure a re-election victory, President Biden has pushed to ease the monetary policies geared to support US-based companies to thrive in a competitive global market. Moreover, the Fed highlighted that rate cuts will begin in 2024, with Wall Street analysts expecting the borrowing rate to decline by 275 basis points.

Meanwhile, the cryptocurrency market and web3 industry have been largely targeted in the United States in a bid to tame the high inflation. Already, the US Department of Treasury has closed a historical settlement of $4.3 billion with leading cryptocurrency exchange Binance Holdings Ltd. Additionally, more US government agencies have charged different crypto firms with non-compliant and money laundering practices.

Meanwhile, more presidential candidates led by former President Donald Trump and Robert F Kennedy have publicly showed support for the blockchain technology and web3 industry in a bid to lure more voters.

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