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| Federal Reserve has made a surprise announcement about their interest rate decision - most important news reported |
Federal Reserve has made a surprise announcement about their interest rate decision - most important news reported
Federal Reserve has set interest rate for June 2023 at 5.00%-5.25%, first time it has been fixed since March 2022.
Data was released showing that inflation in US is decreasing
- Inflation for May was 4.00%, lower than expected rate of 4.1%.
- Core inflation was 5.3% year-on-year, which was in line with predictions
- In May, producer price index was 1.1% higher than it was last year.
- Today, core producer price index recorded 2.8%.
- Fed's decision to keep interest rate unchanged was widely expected by market, with a 98.9% chance of it happening.
Federal Reserve has yet to complete its tightening cycle, so expectations for a higher interest rate in July are likely to rise. Meanwhile, market anticipates that Fed may cut interest rates by end of this year.
Most important details:
Most members think that an interest rate cut could happen in 2024. Everyone agreed that interest should be put in place. Experts predict inflation will increase to 3.2% by end of 2023 & decrease to 2.5% by 2024.
Federal Reserve expects core inflation to reach 3.9% by end of 2023 & 2.6% by 2024, with an accompanying final interest rate of 5.6% for 2023. It anticipates stronger economic growth, lower unemployment levels & a drop in core inflation compared to March's statistics. Fed plans to increase rates once more this year.
Economy is growing at a steady rate, & monetary policy's results can be measured by fixed interest rates. There won't be a rate cut this year according to swap traders. Federal officials predict Gross Domestic Product (GDP) will stand at 1% this year, & 1.1% next year. Swap traders also think interest will rise to 5.35% in September.
Federal Reserve announced that it will continue to increase interest rates over next year, with median expectation rising to 5.6%. This will be done by reducing holdings of Treasury & mortgage securities.