MILANO – The Fed leaves interest rates unchanged. The cost of money remains stuck in a range between 5.25% and 5.50%, at a 23-year high. The Fed plans three cuts in the cost of borrowing, totaling 75 basis points, in 2024.
While noting that “inflation has moderated in the last year”, the US central bank observes that it “remains high”. The long-term objective of 2% remains firm but “the economic outlook is uncertain” and the Fed’s steering committee, the FOMC, remains very attentive to inflation risks.”
In its assessments, the Federal Open Market Committee “will carefully evaluate incoming data, the evolving outlook and the balance of risks.” The Committee believes that “it will not be appropriate to reduce until it has gained greater confidence that inflation is moving sustainably towards 2%”. The “strong” commitment to bring inflation back towards the 2% target remains.
GDP growth estimates updated
The Fed also updated its growth estimates for the US economy to 2.1% from 1.4% in 2024. In 2025 and 2026 the estimate is 2%. The unemployment rate is forecast at 4% in 2024, 4.1 in 2025, 4 in 2026. Inflation remains at 2.4% this year, 2.2% in 2025 and 2.0% in 2026 , while the ‘core’ one is expected at 2.6% this year, 2.2 in 2025 and 2 in 2026.