Today, Wednesday, the US Federal Reserve kept interest rates unchanged at a range of 5.25%-5.5%, in its last monetary policy meeting for the current year after the consumer price index declined slightly last November.
He indicated in new economic forecasts that the historic tightening of US monetary policy has reached its end, and that borrowing costs will decline in 2024.
In a new monetary policy statement, US Central Bank officials paid clear attention to the fact that inflation “slowed over the past year.”
They said they would monitor the economy to see if it was necessary to impose “any” additional increase in interest rates, indicating directly that they may not need to be raised again, after months of sharp tightening.
17 out of 19 US Central Bank officials expected interest rates to be lower by the end of 2024 than they are now, and the current average forecast indicates a decline in interest rates by 0.75 percentage points.
None of the officials expect to raise interest rates by the end of next year.
The US Central Bank said that inflation declined but remained high, while the Monetary Policy Committee remains committed to returning it to 2%.
The annual US inflation rate fell to 3.1% in November from 3.2% in October, according to data issued by the Bureau of Labor Statistics.
But the US Central Bank aims to achieve an inflation rate of 2% in the long term.
Economic growth
The United States economy grew by 5.2% in the third quarter, up from 2.1% in the second quarter, thanks to consumer spending, investment in private inventories, and rising exports, according to data from the US Bureau of Economic Analysis.
Personal income in dollars for Americans rose $218.3 billion in the third quarter, an upward revision of $18.8 billion from the previous estimate. The increase reflects increases in compensation (primarily private wages and salaries) and personal interest income, versus declines in personal current transfer income.
It is noteworthy that higher incomes lead to increased spending, and thus higher inflation rates, while the growth of the economy at greater rates opens the way for the Federal Reserve to further tighten monetary policy if it wants.
The Ministry of Labor said in its monthly employment report that total employment rose by 199,000 jobs last November.
Increased employment means higher incomes for people, which leads to increased consumption and higher inflation, which has remained above the US Federal Reserve’s target.
In a related context, American consumer confidence increased last November to 102 points from 99.1 in October after three consecutive monthly declines, according to a survey by the American Conference Board.
