The Federal Open Market Committee agreed to hold its benchmark rates steady at a rate between 5.25% and 5.5%|William Warby|CC BY 2.0
Federal Reserve officials in December signaled that rate cuts are likely in 2024, but a timeline of when that might occur is uncertain, revealed a summary of the meeting released yesterday.
After the most rapid increase in interest rates in 40 years, between March 2022 and July 2023, the Federal Open Market Committee (FOMC) agreed to hold its benchmark rates steady at a rate between 5.25% and 5.5%.
But, leaving interest rates too high for too long has some policymakers concerned that an “overly restrictive” monetary policy could pose a risk to the economy.
On the other hand, some officials think “circumstances might warrant keeping the target rate at its current value for longer than they currently anticipated.”
The meeting noted progress in the battle to bring down inflation but also suggested that if markets rallied too much due to easing financial conditions, it could leave officials anxious as it would be harder to slow the economy and keep inflation from rising.
According to the individual members’ expectations released after the meeting, cuts are expected over the coming three years to bring the overnight borrowing rate back down near the range of 2%.
The next Fed meeting is on January 30-31.