As expected, the US Federal Reserve kept interest rates unchanged, but it hardened its stance on monetary tightening, as it is expected to raise interest rates again by the end of the year, and to tighten monetary policy until 2024 more than previously expected.
The central bank said in a statement that the Federal Open Market Committee's decision to keep the key lending rate between 5.25 percent and 5.50 percent gives officials time to evaluate additional information and its implications for monetary policy.
The Federal Reserve said on Wednesday that economic activity is expanding at a strong pace, pointing to increased jobs and a decline in the unemployment rate.
A group of positive economic data has raised hopes that policymakers will slow the pace of price increases without causing a recession.
Interest will remain high
The Fed’s expectations showed that interest rates may remain high for a longer period in order to reduce inflation to the specified target. While its expectations for interest rates this year were set at 5.6 percent, it raised them for next year to 5.1 percent compared to 4.6 percent in previous expectations, and the same will be the case in 2025. He raised his interest rate expectations to 3.9 percent, compared to 3.4 percent in the previous forecast.
During its last meeting last July, the US Federal Reserve raised interest rates by 25 basis points (a quarter of a percentage point), reaching a range of 5.25 percent and 5.50 percent, at its highest levels in about 22 years. This is the 11th increase since the beginning of last year.
On Wednesday, the US Federal Reserve more than doubled its forecast for growth rates in the United States this year to 2.1 percent, compared to 1 percent in its previous forecast. It also raised its forecast for growth next year to 1.5 percent, compared to 1.1 percent in its previous forecast.
As for inflation, the US Central Bank raised its annual inflation forecast this year to 3.3 percent, compared to 3.2 percent in its previous forecast in June. It also kept its inflation forecast in 2024 at 2.5 percent, and raised it in 2025 to 2.2 percent, compared to 2.1 percent in previous forecasts. .
The annual inflation rate in America rose to 3.7 percent last August, continuing its rise for the second month in a row, affected by the increase in gasoline prices, after a series of continuous declines. However, it is still far from the US Central Bank's target of 2 percent.
The US Federal Reserve, according to its statement today, expects the unemployment rate to reach 3.8 percent this year, down from 4.1 percent in its previous forecast. He also lowered his forecast for unemployment in the next two years to 4.1 percent in each, compared to 4.5 percent in his previous forecast.