US Federal Reserve signals potential rate cut in late 2023

WASHINGTON – The US Federal Reserve has indicated a possible easing of interest rates towards the latter part of 2023, amid projections of inflation aligning with its 2% annual target. Current rates stand at 0.25%-0.5%, but markets are anticipating a decrease to a range between 1% and 1.25% by the year’s end, based on assessments from the CME FedWatch tool. This outlook is more conservative than the Fed’s September forecast, which suggested maintaining rates between 1.5% and 1.75%.

In its meeting calendar for 2023, the Fed has eight meetings scheduled: January 31, March 22, May 3, June 14, July 31st, September 20, November 8, and December 13th. Announcements will follow each meeting at 2 pm ET with subsequent press conferences, and meeting minutes will be released after three weeks.

The upcoming decision on December 13 is not expected to bring any change in interest rates. However, fresh projections will be shared that could shape future policy decisions. While some Fed members have acknowledged that further hikes could occur under certain economic conditions, such a move seems unlikely at present.

The strength of the job market has been a positive sign for the economy; however, there are indications of potential softening as we move into the next year. With a recession still within the realm of possibility for 2024, swifter rate cuts may be implemented if economic conditions worsen significantly.

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