By the end of 2023, the interest rate projections remained at 5.1%, said Gabriela Siller, director of financial economic analysis at Banco Base.
“The Fed will continue to combat high inflation in the United States which, although it has been slowing for nine months, is still well above the 2% average target. By not moving rate expectations, he implicitly says that he is not so concerned about the problem of the banks in the United States, ”he considered.
The Federal Open Market Committee, which sets policy, said only that “additional policy tightening may be appropriate,” leaving open the possibility that an additional quarter percentage point rate increase, perhaps in the next meeting of the Fed, could represent a point to stop the rises.
There were no disagreements about the decision.
The statement does not presume that the battle against inflation has been won. The new statement removed the reference that inflation “has eased” and replaced it with the phrase that it “remains elevated.”
Job growth is “solid,” according to the Federal Reserve.
Officials expect the unemployment rate to end the year at 4.5%, down slightly from December’s 4.6%, while the outlook for economic growth dipped slightly to 0.4% from 0.5%. Inflation will end the year at 3.3%, compared to 3.1% in the latest forecasts.
The outcome of this week’s two-day meeting marks an abrupt rethinking of the central bank’s strategy of just two weeks ago, when its chairman, Jerome Powell, told Congress that higher-than-expected inflation would likely force the entity to raise interest rates more and possibly faster than expected.
Crisis impact
Federal Reserve Chairman Jerome Powell said officials considered not raising interest rates at the meeting that ended Wednesday because of stress on the banking system following the collapse of Silicon Valley Bank.
Asked at the Fed’s post-policy news conference whether officials had considered a pause rather than the quarter-point rate hike they opted for, Powell said: “Yes, we do.”
With information from Reuters
