Fed holds rates steady and indicates series of cuts in 2024

With the economy moderating, the labor market balancing and inflation easing, the Federal Reserve decided to maintain the target federal funds rate at between 5.25 percent and 5.5 percent at its meeting in December, and indicated that multiple rate cuts could be coming in 2024.

In his speech on Dec. 13, Jerome Powell, the Fed chair, observed, “Our actions have moved our policy rate well into restrictive territory, meaning that tight policy is putting downward pressure on economic activity and inflation, and the full effects of our tightening likely have not yet been felt.”

Powell went on to address the fact that high mortgage rates and high interest rates are affecting the housing sector and business fixed investment. While GDP is currently on track to grow around 2.5 percent for 2023, the median estimate from Federal Open Market Committee participants forecasts GDP moderating to 1.4 percent in 2024.

The labor force participation rate has risen since the pre