The US Federal Reserve Holds Rates Steady Amid Cautious Outlook

With signs of economic stabilization and easing inflation,
the Federal Reserve adopts a measured approach to shaping its future monetary policy path.

Topic

Interest

Future Expectations

Interest

Rate Hold Reflects Signs of Economic Stability

At the conclusion of its June meeting, the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve decided to keep interest rates unchanged, maintaining the target range between 4.5% and 5.5%.
This move aligned with broad market expectations and continues the Fed’s cautious stance,
following its previous rate cut in September—the first since March 2020—amid signs of inflation nearing the 2% target.

The monetary policy statement noted that economic activity continues to expand solidly despite some volatility from net exports.
It also highlighted that the labor market remains stable, with unemployment holding at low levels.
Although inflation has partially eased, it remains above target,
prompting the Fed to maintain its current policy while closely monitoring market and economic developments.

Future Expectations

Forward Guidance Signals Prudence and Flexibility

The Fed emphasized that although uncertainty surrounding the economic outlook has declined, it remains relatively high.
As a result, the central bank will continue to assess incoming data, forecast shifts,
and market risks before making further decisions.
It also reaffirmed its ongoing reduction of Treasury holdings and mortgage-backed securities,
and its readiness to adjust policy as needed.

According to the latest economic projections, the U.S. economy is expected to grow by 1.4% in 2024,
gradually rising to 1.8% over the long term.
The unemployment rate is forecasted to remain at 4.5% in 2025 and 2026, slightly easing to 4.4% in 2027,
with a long-term outlook of 4.2%.
Inflation is projected to fall to 3.0% in 2024, 2.4% in 2025, and reach the 2.0% target by 2027.
Core inflation is estimated at 3.1% this year, dropping to 2.4% next year, and 2.1% in 2027.

As for interest rate expectations, projections indicate a decline to 3.9% in 2025, 3.6% in 2026,
and 3.4% in 2027, settling at 3.0% over the long term.
These forecasts confirm the Fed’s cautious stance as it continues to navigate a path toward financial stability and long-term strategic goals.

The US Federal Reserve Holds Rates Steady Amid Cautious Outlook

The US Federal Reserve Holds Rates Steady

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