The Fed’s Interest Rate Projections. The Federal Reserve or The Fed is ready to maintain its benchmark interest rate stable at its highest level (higher for longer) in 22 years at its second meeting, namely 31 October – 1 November 2023.
The Federal Open Market Committee (FOMC) is predicted to keep interest rates unchanged in the range of 5.25%-5.5%. Meanwhile, the Fed will also open the possibility of another increase in December with resilient economic growth.
Fed Chair Jerome Powell has signaled that Fed leaders would prefer to wait to evaluate the impact of past rate hikes on the economy towards the end of the rate hike campaign.
The sharp increase in US Treasury yields has contributed to tighter financial conditions. Some Fed officials have also mentioned that this reduces the need for a rate hike at this meeting. Deutsche Bank AG estimates the recent spike could be equivalent to a three-quarter point increase in interest rates from the Fed.
Meanwhile, FOMC members who tend to be hawkish, including Lorie Logan from the Dallas Fed and Governor Christopher Waller, indicated that they would be patient in making interest rate movements.
With inflation still well above the committee’s target of 2% and the economic growth rate near its highest level in two years, policymakers want to keep the option of another increase.
The Fed’s Interest Rate Projections. The decision on interest rates and the accompanying statement will be released at 14.00 in Washington, or 1.00 WIB in the morning. Chairman Jerome Powell will hold a press conference 30 minutes later.
Powell is expected to take questions to clarify whether he agrees with the committee’s projections from September 2023, when they expect another rate hike towards the end of the year.