US Fed leaves rates unchanged, signals cuts in 2024

The Federal Reserve held interest rates steady on Wednesday (Dec 13) and signaled in new economic projections that the historic tightening of US monetary policy engineered over the last two years is at an end and lower borrowing costs are coming in 2024.

The Federal Reserve held interest rates steady on Wednesday (Dec 13) and signaled in new economic projections that the historic tightening of US monetary policy engineered over the last two years is at an end and lower borrowing costs are coming in 2024.

In a new policy statement, US central bank officials took explicit account of the fact that inflation "has eased over the past year," and said it would watch the economy to see if "any" additional rate hikes are needed - implying directly that, after months of aggressive tightening and a bias towards moving rates higher, they may not need to raise them again.

Indeed, a near unanimous 17 of 19 Fed officials project that the policy rate will be lower by the end of 2024 than it is now - with the median projection showing it falling three-quarters of a percentage point from the current 5.25-5.50 per cent range. No officials see rates higher by the end of next year.

Speaking in a press conference following the end of a two-day policy meeting, Fed Chair Jerome Powell flagged the uncertainty of the outlook and said he couldn't definitively rule out higher rates at this point, even as officials looked toward a lower policy rate.