Fed keeps interest rates steady

The US Federal Reserve (Fed) announced the interest rate decision that global markets were expecting. While the Fed kept the policy rate steady as expected, most Fed officials signaled another rate hike this year. The upward revision in the Fed's economic projections for 2023 growth expectations, along with the downward update on the core PCE side, drew attention. The US Federal Reserve (Fed) kept the policy rate range at 5.25-5.50 percent. The median expectation of economists participating in the Bloomberg survey was that the policy rate range would be kept at this level. The Fed also signaled a signal in line with market expectations in its guidance for this year. Fed officials predicted another rate hike this year. 12 of the 19 members indicated that they expect another rate hike this year. The Fed's interest rate forecast for 2024 was raised from 4.6 percent to 5.1 percent, and for 2025 from 3.4 percent to 3.9 percent. The Fed's interest rate forecast for 2026 was 2.9 percent. The long-term average interest rate expectation was kept at 2.5 percent. The statement emphasizing that authorities will determine "the scope of additional policy tightening that may be appropriate" was repeated in the decision text. The text also stated that employment growth has slowed down recently but remains strong. Economic projections were also announced The Fed's expectations regarding economic indicators were also published along with the decision text. Accordingly, the bank made a significant upward revision in its 2023 growth expectation. The Fed, which gave a 1 percent estimate for 2023 growth at its June meeting, lowered this estimate to 2.1 percent at this meeting. The 2024 growth expectation increased from 1.1 percent to 1.5 percent, while the 2025 growth expectation was maintained at 1.8 percent. Unemployment expectations were also lowered in parallel with the growth expectation. The Fed lowered its 2023 unemployment expectation from 4.1 percent to 3.8 percent. The 2024 and 2025 unemployment expectation was lowered from 4.5 percent to 4.1 percent. The headline PCE inflation indicator monitored by the Fed increased the expectation for 2023 from 3.2 percent to 3.3 percent, while the 2024 expectation for the same indicator was maintained at 2.5 percent. On the core PCE side, a downward revision for 2023 was notable. The expectation, which was 3.9 percent at the June meeting, was lowered to 3.7 percent. The 2024 core PCE expectation was kept at 2.6 percent.