The Federal Reserve keeps interest rates unchanged and may cut interest rates three times next year. U.S. stocks are rising, and BTC is close to 43K

The Federal Reserve announced its interest rate decision in the early hours of today in Taiwan, keeping interest rates unchanged at 5.25~5.5% for the third consecutive time, laying the foundation for multiple interest rate cuts in 2024 and beyond. U.S. stocks rose, with the Dow Jones Industrial Average breaking through 37,000 points for the first time, setting a record high. Bitcoin and Ethereum have also temporarily escaped corrections, with BTC approaching 43K and ETH also rising by more than 3%.

Interest rates remain high, economic activity slows but remains strong

The Federal Reserve kept its benchmark interest rate unchanged at 5.25~5.5%, in line with market expectations. The Federal Open Market Committee (FOMC) policy statement said recent indicators point to growth in economic activity slowing from a strong pace in the third quarter, with job growth moderating since earlier this year but remaining strong, and the unemployment rate remaining low.

Committee members raised annualized gross domestic product (GDP) growth to 2.6% in 2023, up half a percentage point from the last update in September. Officials expect GDP to be 1.4% in 2024, about the same as previously forecast. Unemployment forecasts remain largely unchanged, with unemployment at 3.8% in 2023 and rising to 4.1% in subsequent years.​

Inflation falls, Fed begins discussing rate cut options

Inflation has eased somewhat. Fed officials expect core inflation to fall to 3.2% in 2023, 2.4% in 2024, and then to 2.2% in 2025. Ultimately, it will return to the 2% target level by 2026.

Federal Reserve Chairman Powell lightly admitted at the press conference after the meeting that members discussed the issue of interest rate cuts during the meeting. According to the interest rate dot plot released this time, members are expected to cut interest rates by 3% next year, a rate cut that exceeds previous expectations. Raising interest rates is no longer the default position of the committee members, and the conditions for lowering interest rates will be the focus of subsequent discussions.

According to the CME FedWatch Index, the market is generally expecting the Federal Reserve to start cutting interest rates in March next year (up from 43.7% yesterday to 84%), and the rate cut next year may be as high as six percentage points.

This article The Federal Reserve keeps interest rates unchanged and may cut interest rates three times next year. U.S. stocks are rising, and BTC is close to 43K. It first appeared on Lian News ABMedia.