The Federal Reserve leaves interest rates unchanged once again : NPR
S E E D E D C O N T E N T
Updated December 13, 20236:29 PM ET Originally published December 13, 20232:07 PM ET
Scott Horsley
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Federal Reserve Chair Jerome Powell speaks during a news conference after the central bank's policy meeting at the Federal Reserve in Washington, D.C., on Nov. 1, 2023. The Fed kept interest rates unchanged on Wednesday, but projected they would be able to lower them next year. Kevin Dietsch/Getty Images hide caption
Federal Reserve Chair Jerome Powell speaks during a news conference after the central bank's policy meeting at the Federal Reserve in Washington, D.C., on Nov. 1, 2023. The Fed kept interest rates unchanged on Wednesday, but projected they would be able to lower them next year.
Kevin Dietsch/Getty Images
The Federal Reserve signaled it's probably done raising interest rates to curb inflation and the central bank could start cutting rates next year.
Inflation has moderated recently, giving more comfort to policymakers. Annual inflation fell to 3.1% in November, thanks in part to a steep drop in gasoline prices, the Labor Department said Tuesday. Overall prices are climbing less than half as fast as they were at the beginning of the year.
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Inflation continues to moderate thanks to a big drop in gas prices
"We're seeing inflation making real progress," Fed chairman Jerome Powell told reporters Wednesday. "These are the things we've been wanting to see."
He added that while policymakers don't anticipate additional rate hikes, they're not ruling them out.
"We still have a ways to go," Powell said. "No one is declaring victory. That would be premature."
The Fed's rate-setting committee left interest rates unchanged on Wednesday. Forecasts released by Fed policymakers show that, on average, they think they'll be able to lower their benchmark rate by three-quarters-of-a-percentage point by the end of next year, and another full point in 2025.
Investors cheered the news, since falling interest rates typically lead to rising stock prices. The Dow Jones Industrial Average soared more than 512 points Wednesday and closed at a record high above 37,000.
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Customers shop for groceries in Chicago on Nov. 20, 2023. Annual inflation eased to 3.1% last month, helped in part by slower gains in gas and grocery prices. Scott Olson/Getty Images hide caption
Customers shop for groceries in Chicago on Nov. 20, 2023. Annual inflation eased to 3.1% last month, helped in part by slower gains in gas and grocery prices.
Scott Olson/Getty Images
The economy has done better than expected
The Fed has kept its benchmark interest rate at a 22-year high between 5.25 and 5.5% since July. Higher interest rates make it more expensive to buy a car, expand a business, or carry a balance on your credit card. The high rates are intended to tamp down demand and bring prices under control.
So far, the economy has weathered higher interest rates in far better shape than many forecasters expected.
The unemployment rate has been under 4% for 22 months in a row. The economy added more than 2.5 million jobs in the first 11 months of the year.
Fed policymakers expect somewhat slower growth and higher unemployment in 2024, but their outlook does not include a recession.
"This is what a soft landing looks like, and this is what full employment feels like," said Joe Brusuelas, US chief economist for RSM. "That's why we're optimistic about the direction of the economy, heading into 2024."
The timing of any rate cuts during an election year could be politically sensitive, however.
When he was in the White House, Donald Trump frequently urged the Fed to cut rates to boost the economy. Former President George H.W. Bush blamed elevated interest rates in 1992 for costing him his reelection.
Powell, who jealously guards the central bank's independence, insists politics won't factor into the Fed's decision-making.
"We don't think about politics," Powell said. "We'll do the things that we think are right for the economy at the time when we think is the right time"
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This seems like it might be good news for Biden going into next year with his economic messaging. So far he's hasn't connected with voters on the issue, but perhaps lower interest rates before the election will give him a boost.
A soft economic landing without the predicted post-Covid recession along with historically low unemployment, waning inflation, a growing economy, steady wage growth, a blooming stock market, lower rates and growth in consumer confidence bodes well for Biden in 2024...
It hasn't so far, but we will see. Also a over robust jobs market will slow the Feds 2% target rate and that won't be good for Biden.
Wow, with all that you would think Biden would not still be polling from the toilet. Do you think maybe Americans are not buying what Joe and you are trying to sell?
Oh, the most devout Bidenistas will simply tell us that Americans are just too stupid to know what their own personal finances are.
Well, that, and that Democrats simply have a "messaging problem", which to them means we are just too stupid to understand what they are telling us.
Failure to endorse the mess that is Bidenomics shows a little intelligence. Why believe it's raining when Democrats are pissing on our legs?
Seems most people are employed and buying shit even as they bitch about their credit card bill. Again that looks like it might reverse itself just in time for the election... That's gotta piss off all the partisan republican'ts
They are hoping people are too stupid. You see that at every time the Press Secretary opens her mouth. Based on the polls it seems even some Dems are starting to show a little intelligence.
Aw, looky there. Something having nothing to do with anything.
I am smart enough to not carry any credit card debt. Holding high CC debt is a sure sign of financial immaturity in most cases.
Mortgage rates remain high enough to price many Americans out of the housing market.
Most Americans are worse off today than 4 years ago.
Probably figure Joe will forgive their debt.
I know, like Joe said, inflation is transitory.
It is funny that the Democrats are now waking up. We have been telling them that for years.
I wonder if Democrats enjoy their own party telling them they are just too stupid to understand what they are being sold.
I love that one. To paraphrase past press secretary Dana Perino "If things were going well the messaging would take case of itself".
Unless they are too stupid to realize their party is calling them too stupid.
It would have to happen before it could piss anybody off. Many are still paying off bills because of Biden's record high inflation.
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I'm sure you can point to the exact Biden policies that caused world wide high inflation?
The rest of your bullshit is off topic.
The list of which ones DIDN'T is much shorter.
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You were warned.
If that does happen, you won’t have Biden to thank. Thank Powell for his aggressive federal reserve policy.
Period, full stop.
I doubt it, but then again there are some really stupid people.
Many ''experts'' are saying next year (2024) the market is going to skyrocket.
We'll find out soon enough.
The Dow rallied up 500 points on the news yesterday.
Based entirely upon expectation and speculation.
Thank you for that thoughtful and helpful explanation on how the stock market works. /s
Well then, you should buy, buy, buy!