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Fed Maintains Interest Rates

The Federal Reserve left benchmark interest rates unchanged Wednesday at its November meeting, CNBC reports.

What’s going on: “In a widely expected move, the Fed’s rate-setting group unanimously agreed to hold the key federal funds rate in a target range between 5.25%–5.5%, where it has been since July. This was the second consecutive meeting that the Federal Open Market Committee chose to hold, following a string of 11 rate hikes, including four in 2023.”

Why: Stronger economic activity in Q3 and a loosening labor market led to the decision, according to the Fed’s post-meeting statement.

  • However, inflation—now running at 3.7% on an annual basis—still “has a long way to go” to get to the central bank’s goal of 2%, Fed Chair Jerome Powell said after the meeting.
  • Economic growth may need to slow to bring inflation down further, Powell told an audience at the Economic Club of New York last month.

Jobs: Manufacturing job openings rose in September, up to 627,000 from 604,000 in August, according to the Bureau of Labor Statistics.

Slower growth ahead? “A Treasury Department forecast released earlier this week indicated that the pace of growth likely will tumble to 0.7% in the fourth quarter and just 1% for the full year in 2024. Projections the Fed released in September put expected GDP growth at 1.5% in 2024.”

The NAM’s take: “While there is another chance for a 25-basis-point increase at the upcoming FOMC meeting on Dec. 12–13, the Fed might keep rates unchanged for the third straight meeting at the end of the year,” NAM Chief Economist Chad Moutray said. “Moving forward, interest rates are not likely to see a cut until mid-to-late 2024.”

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