The United States Federal Reserve maintained the reference rate and raised its GDP growth forecast.

Federal Reserve Chairman Jerome Powell (Reuters/Tom Brenner)

The United States Federal Reserve (Fed) announced this Wednesday that it has kept interest rates unchanged at their current range for the fifth consecutive time and considered that unless we are convinced that it is not appropriate to reduce these inflation Continuously progressing towards the 2 percent annual target.

“When considering any adjustments, the Committee will carefully monitor incoming information and the balance of risks,” the US regulator said after keeping rates within range. 5.25% to 5.5%Its highest level since 2001,

Meanwhile, Federal Reserve officials indicated they expect to lower their reference interest rate three times Further reductions are expected during 2024 and into 2025.

Stockbroker in New York (Reuters/Brendan McDiarmid)

investors in wall Street They reacted with enthusiasm, because falling interest rates means money will flow into the markets, which could boost US growth. All three indexes closed at new records: the Nasdaq at 16,369, the S&P 500 at 5,224 and the Dow Jones at 39,512.

Nine of the Fed’s 19 policymakers anticipate three quarterly rate cuts this year, and nine others anticipate two or fewer. Only one cut is expected to exceed the average, compared with five in December.

The new estimates show that policymakers are willing to keep rates high for a longer period of time to ensure that inflation does not stagnate, or rise again, above its 2% target.

Officials estimate official interest rate to rise by the end of 2025 3.9%According to the mean of their projections, that implies three more cuts of a quarter percentage point each next year. In December, an average of policymakers expected a rate of 3.6% by the end of 2025.

Along with their interest rate decision, Federal Reserve officials also updated their economic forecasts on Wednesday. US growth prospects have improved significantly this year, rising to 2.1% from 1.4% in December.

Monetary policymakers kept the headline inflation forecast unchanged, but slightly raised the outlook for so-called annual “core” inflation – which excludes energy and food prices. 2.6 percent.

He expects the unemployment rate, which rose to 3.9% last month, to rise to 4.0% by the end of the year – up from 4.1% in December. And now they expect it to stand at 4.1 percent at the end of 2025.

Policymakers also significantly changed their long-term outlook on the Fed’s official interest rate, which is now 2.6%, up from 2.5% previously.

This suggests that the central bank may not need to reduce borrowing costs to reach a level that neither encourages nor discourages investment and hiring in a healthy economy.

(With information from Reuters, AP and EFE)

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