The Federal Reserve has chosen not to raise interest rates this month, maintaining them at 5.25% to 5.5%. This decision marks a departure from the trend observed over the past 11 Federal Open Market Committee (FOMC) meetings, during which rates were consistently raised.
The initial hike in this series began in March of 2022, with the most recent one taking place in July 2023. The FOMC convenes every two months.
According to the Fed’s newly released projections, there’s reason to be hopeful for the economic landscape, as they now anticipate a 2.1% growth for the current year.
This forecasted growth rate more than doubles their earlier prediction made in June 2023. In another positive note, the national unemployment rate is projected to remain stable at 3.8%, instead of climbing to the previously expected 4.1%.
However, not everything looks rosy. The economy could face headwinds from rising oil prices and the current auto worker strike. Both these factors have the potential to cause a short-term surge in inflation.
Following their recent meeting, the Fed released a statement expressing confidence in a “soft landing” for the economy. Nevertheless, the committee appears to be split on the trajectory of future interest rate hikes.
Out of the committee members, 12 predict another rate increase, while seven anticipate that the rates will remain steady.
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