The Federal Open Market Committee (FOMC) has announced that it will maintain the federal funds rate at its current range of 5.25% to 5.50%, as expected by experts.
Since March 2022, the central bank has increased its benchmark borrowing rate a total of eleven times.
In addition, FOMC members have released new economic projections which indicate their intention to raise interest rates before the end of this year and potentially surpass their previous predictions for higher borrowing costs in 2024.
Their latest median estimate suggests a decrease in the federal funds rate to 5.1% by late-2024, up from June’s projection of only reaching 4.6%. They anticipate further decreases thereafter with rates potentially falling to as low as 3.9% by late-2025 and ultimately settling at around an estimated average of just under three percent (2.9%) come late-2026.
Accordingly, “the Committee will take into account various factors such as cumulative monetary policy tightening measures taken thus far; time lags associated with how these policies affect both economic activity levels and inflation; along with any relevant developments within financial markets” when determining future actions towards achieving long-term inflation targets set at two percent (2%), according to FOMC statement notes.
