Fed eyes rate cuts in 2024, though tone will remain restrictive ‘for some time’

MADRID, Jan. 3 (-) –

The Federal Open Market Committee (FOMC) of the United States Federal Reserve (Fed) addressed the possibility of cutting interest rates throughout 2024, although it also assured that it would be appropriate to maintain a restrictive tone “for some time” until inflation can be considered controlled, according to the minutes of its last monetary policy meeting, held on December 12 and 13.

“The members [de la FOMC] “estimated that the reference rate was probably close to or at maximum levels for the current tightening cycle,” the document indicated, although it warned that this could vary depending on economic developments.

In this sense, the issuing institute has recalled the importance of maintaining a focus on data and being “cautious” when setting the monetary roadmap of the leading world power, and has warned that this should continue to be restrictive “for some time” until inflation is clearly converging with the 2% inflation target.

Those responsible for the Fed “considered that the current orientation of monetary policy […] appears to be slowing down economic activity and inflation,” but they also insisted that “it was possible that the economy could evolve in a way that would make it convenient to continue increasing the target range.”

However, all FOMC members agreed that there had been “clear progress” in terms of inflation in 2023, and the majority agreed that the upward risks of this indicator were “balancing.”

On the other hand, certain members echoed the “uncertainty” associated with maintaining a restrictive policy for longer than necessary. Thus, in line with the macro projections published in December, almost all participants in the meeting took it for granted that interest rates in 2024 would close below the current mark of the target range of 5.25% and 5.5%. .

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