The Fed has announced its interest rate decision

The US Federal Reserve (Fed) has left interest rates unchanged.

The US Federal Reserve (Fed) did not change the policy interest rate, in line with expectations. The Fed announced that it has kept the interest rate steady in the 5.25-5.50 percent range, which is the highest level in 23 years.

In the statement released by the Fed, it was noted that the decision to keep the interest rate unchanged was taken unanimously.

The statement conveyed that the Federal Open Market Committee (FOMC) aims to achieve maximum employment and 2 percent inflation in the long run.

The statement, which noted that the committee believes the risks to achieving its employment and inflation goals have moved toward a better balance over the past year, recorded that the economic outlook is uncertain and that the committee will remain highly attentive to inflation risks.

The statement reported that it was decided to keep the target range for the federal funds rate at 5.25-5.50 percent to support these goals.

NO CHANGE IN INTEREST RATE FOR 7 CONSECUTIVE MEETINGS

Having started interest rate hikes in 2022 after completing its asset purchase operation in the face of high inflation in the US, the Fed had carried out 11 interest rate hikes since March 2022 and increased the interest rate by a total of 525 basis points.

With these increases, the bank's policy interest rate had risen to the 5.25-5.50 percent range, the highest level since 2001.

With its latest decision, the Fed has left the policy interest rate unchanged in the current range by not changing it for 7 consecutive meetings. The bank last made a 25 basis point hike in the policy interest rate in July 2023.

In the US, inflation, after seeing its highest level since 1981 at 9 percent on an annual basis in June 2022, most recently came in below expectations at 3.3 percent on an annual basis in May.

The US Federal Reserve's (Fed) projections revealed that the bank could make 1 interest rate cut this year instead of 3.

In the statement made by the Fed following the two-day Federal Open Market Committee (FOMC) meeting, it was conveyed that recent indicators suggest that economic activity has continued to expand at a solid pace.

Stating that employment gains remain strong and the unemployment rate remains low, the statement noted that inflation has fallen over the past year but remains high.

The statement conveyed that "modest" progress has been made in recent months toward the 2 percent inflation target set by the FOMC. In its monetary policy decision text last month, the Fed had stated that progress toward the 2 percent inflation target had not been achieved.

The Fed, which also announced its projections regarding the economy, raised its projection for the federal funds rate for the end of this year from 4.6 percent to 5.1 percent.

While the Fed's projection for the federal funds rate for 2025 was raised from 3.9 percent to 4.1 percent, it was left at 3.1 percent for 2026.

These projections indicated that the Fed anticipates a total of 1 interest rate cut of 25 basis points in 2024. In the projections it published in March, the bank had signaled that there would be a total of 3 interest rate cuts of 75 basis points this year.

According to the Fed's "dot plot," while 4 FOMC members do not expect an interest rate cut this year, 7 members projected one, and 8 members projected two interest rate cuts.

The bank's inflation projections were raised from 2.4 percent to 2.6 percent for this year, and from 2.2 percent to 2.3 percent for 2025, while it was kept steady at 2 percent for 2026.

Projections regarding core inflation, which does not include volatile energy and food prices, were also revised from 2.6 percent to 2.8 percent for this year, and from 2.2 percent to 2.3 percent for 2025, while it was maintained at 2 percent for 2026.

The US economic growth projection was left at 2.1 percent for this year, and at 2 percent for next year and 2026.

Projections regarding the unemployment rate were kept steady at 4 percent for this year, and were raised from 4.1 percent to 4.2 percent for 2025, and from 4 percent to 4.1 percent for 2026.

News Source: 12punto