The Federal Reserve, as expected, keeps interest rates unchanged, with the economic outlook steadily expanding. There may be another rate hike by the end of the year.

The Federal Reserve (Fed) decided on Wednesday, the 20th, to keep interest rates steady within the range of 5.25% to 5.5%, the highest in 22 years. The latest dot plot of interest rates suggests the possibility of another rate hike before the end of the year, with a much lower expected rate cut next year. The three major U.S. stock indices all declined, and as of the deadline, Bitcoin fell by 0.4% in the past 24 hours to 27,106, while Ethereum dropped by 1.31% to $1,621.

FED Maintains Interest Rates, Likely to Raise Rates Again Before Year-End

The Federal Reserve, in a post-meeting statement, stated that economic activity in the United States has been steadily expanding. Job growth has slowed in recent months but remains strong, with the unemployment rate staying at relatively low levels. However, inflation continues to remain high.

The Committee aims to achieve maximum employment and 2% inflation over the long term. To support these goals, the Federal Reserve decided to keep the target range for the federal funds rate unchanged at 5.25-5.5%, pausing on further rate hikes after a one-time increase in July to observe the lagged response of subsequent economic data.

The rate dot plot released indicates that the Federal Reserve may raise rates once more before the end of the year. The dot plot also suggests the Fed may cut rates twice next year, with the federal funds rate at 5.1% by the end of 2024, which is two notches higher than the 4.6% forecast in June.

Steady Expansion in Economic Outlook

In addition to rate forecasts, members also significantly raised their economic growth expectations for this year, with GDP now expected to grow by 2.1%. This is more than double the estimate in June, indicating members do not anticipate a near-term economic recession. GDP expectations for 2024 have been revised up from 1.1% to 1.5%.

The expected inflation rate, measured by the core personal consumption expenditures price index PCE, has also decreased to 3.7%, down 0.2% from June; the unemployment rate outlook has been revised down from the previous 4.1% to 3.8%.

According to the latest FedWatch predictions by the CME Group, market expectations for rate cuts next year have been pushed back to after July.