US | Fed’s debate on how high should rates go is likely to end soon

The strength of the economy and the job market will refrain the Fed from ruling out the chance of an additional rate hike this year. For now, the FOMC will skip and leave its options open.

Key points

• Key points:
• The FOMC will likely decide to “skip” raising rates as it did last June, leaving the fed funds rate unchanged at its current 5.25-5.50% target range.
• FOMC members welcomed the recent evolution of core inflation but remain vigilant of inflation risks stemming from a still strong economy and labor market.
• Chair Powell stated that they are now in a position to “proceed carefully” as they continue to seek a “sufficiently restrictive” policy stance.
• The Fed will leave its doors open for an additional rate hike before year-end; a slightly dovish majority could result in a lower projected fed funds rate for 2024.
• Updated projections might show stronger growth but inflation easing faster than previously expected.

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