Fed keeps interest rates unchanged, expected to cut 3 times in 2024, financial markets fluctuate strongly

December 14, 2023 08:18 Nhat Linh Print article

ANTD.VN - For the third consecutive time, the US Federal Reserve (Fed) did not raise interest rates. At the same time, it sent a clear signal that it had ended its interest rate hike campaign and would have three cuts in 2024. Stocks, gold prices and the USD on the world market all fluctuated strongly.

Accordingly, at the end of the policy meeting early this morning, Fed officials agreed to keep the federal funds rate in the range of 5.25% - 5.5%, the highest level since 2001.

Notably, this is the first time since March 2021 that policymakers have forecast no further interest rate hikes – a pivot that the market has long been waiting for.

Federal Open Market Committee (FOMC) members also expect at least three rate cuts in 2024.

Meanwhile, the dot plot of individual officials' projections shows four more cuts of 1 percentage point each in 2025. Three more cuts in 2026 would bring the federal funds rate down to a range of 2% to 2.25%.

Fed phát đi tín hiệu rõ ràng về xoay trục chính sách

The Fed sends a clear signal about its policy pivot.

Speaking at a press conference later, Fed Chairman Jerome Powell said that inflation had fallen from record highs and that this had happened without a significant increase in unemployment. That was very good news.

Fed officials see core US inflation (excluding food and energy prices) falling to 3.2% in 2023 and 2.4% in 2024, then to 2.2% in 2025. It will finally return to the 2% target in 2026.

At the same time, they also raised their GDP growth forecast to 2.6% annually in 2023, up half a percentage point from the last update in September; GDP in 2024 will be at 1.4%, largely unchanged from the previous forecast.

Policymakers also kept their unemployment forecast at 3.8% in 2023 and rising to 4.1% in subsequent years.

In response to this news, US stocks jumped strongly, with the Dow Jones index increasing 512.3 points (1.4%), the NASDAQ Composite increasing 200.57 points (1.38%), and the S&P 500 increasing 63.39 points (1.37%)...

Gold prices also increased sharply with an increase of nearly 48 USD for spot gold, to 2,027 USD/ounce.

Meanwhile, the USD fell sharply with the USD Index, which measures the greenback's strength against a basket of six major currencies, losing more than 1.1 percentage points to around 102.8 points.

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