Federal Reserve Keeps Key Interest Rate Unchanged And Foresees 3 Rate Cuts Next Year

The Federal Reserve kept its key interest rate unchanged Wednesday for a third straight time. Its officials signaled that they expect to make three quarter-point cuts to their benchmark rate next year. – Washington AP.

The message of the Fed on Wednesday strongly suggested that it is done with hiking the rates after the most rapid increase in four decades. Fed is sliding closer to cutting down the rates as early as next summer.

Talking about it at a press conference, Chairman Jerome Powell said that ?Fed officials are likely done raising rates because of how steadily inflation has cooled.?

?Inflation keeps coming down, the labor market keeps getting back into balance and it?s so far, so good,?

Powell had said after the 19-member policy committee of the Fed had ended its very recent meeting.

Federal Reserve Is Done with increasing its rates

On Wall Street, the traders had celebrated the entire prospect of all the lower rates ahead. The stock prices also soared, and the bond yields dropped after the Federal Reserve had issued the statement and Powell had the news conference.

Wednesday marked a big shift in the outlook of the central bank over the interest rates and the economy. Just two weeks before, Powell had mentioned that it was very ?premature? to conclude that the Fed is done with raising the key threshold rate or to ?speculate? about the cut in the rates.

However, on Wednesday, he hinted that the Federal Reserve is apparently done with increasing its rates. Also, he acknowledged that all the officials had a discussion about the expectation of rate reductions in the meeting.

In response to a question, Powell has said that, ?Federal Reserve recognizes that keeping rates high for too long, and waiting too long to cut them, could endanger the economy.?

?We?re aware of the risk that we would hang on too long before reducing borrowing rates,? the Fed chair said. ?We know that?s a risk, and we?re very focused on not making that mistake.?

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Upasana is a budding journalist who has a keen interest in writing. She considers writing as therapeutic and is most confident when she writes. She is passionate about music, movies and fashion. She writes in a way that connects with the audience in a personal level. She is optimistic, fun loving and opinionated.