US Fed to Keep Policy Rate Between 5.25% - 5.50% Due to Inflationary Pressures And a Tight Labour Market.
London, 1 May 2024
After two days of policy meetings, the US Federal Reserve is expected to keep its policy rate between 5.25% and 5.50%. This is because persistent inflationary pressures and a tight labour market point to a stall in the process of bringing inflation back to this year's target of 2%.
News Update
Investors are anxious to hear Chair Jerome Powell's thoughts in order to determine whether or not the current inflationary developments will affect the likelihood of interest rate decreases in the near future.
Investors are now laying almost even odds on a 25 basis point drop at the September meeting, reflecting a shift in expectations. Furthermore, the likelihood that there would be no rate decreases from the current range has increased to almost one in four, which is a significant change from almost zero odds as recently as April.
Stats
The US benchmark interest rate was 5.50 percent as of the most recent record. From 1971 to 2024, the interest rate in the US was 5.42 percent on average; it peaked in March 1980 at 20.00 percent and fell to a record low of 0.25 percent in December of 2008. The most recent reported number for the US Federal Funds Rate is available on this page, along with earlier releases, historical highs and lows, a short- and long-term prognosis, an economic calendar, survey consensus, and news. The most recent update to the United States Fed Funds Interest Rate statistics, historical chart, projections, and release timetable was made in May 2024.
Forecast
The US benchmark interest rate was 5.50 percent as of the most recent record. The global macro models and analysts at Trading Economics predict that by the end of this quarter, the interest rate in the United States will be 5.50 percent. The Trading Economics econometric models predict that, over the long run, the US Federal Funds Interest Rate will tend towards 4.25 percent in 2025 and 3.25 percent in 2026. (Source: Trading Economics)