China News Service, New York, March 20 (Reporter Wang Fan) The U.S. Federal Reserve announced on the 20th that it would maintain the target range of the federal funds rate at 5.25% to 5.5%, in line with market expectations.
On that day, the three major U.S. stock market indexes collectively hit record closing highs.
The Federal Reserve issued a statement after its two-day regular monetary policy meeting, saying that recent indicators indicate that U.S. economic activity is expanding steadily, job growth remains strong, and the unemployment rate remains low.
Inflation has slowed over the past year but remains high.
As the Fed strives to achieve its full employment and 2% inflation goals, the risks it currently faces are moving towards a better balance.
Given the uncertain economic outlook, the Fed remains highly concerned about inflation risks.
The statement said that in order to achieve its goals, the Federal Reserve decided to maintain the target range of the federal funds rate unchanged at 5.25% to 5.5%.
The Fed will carefully evaluate new data and balance risks when considering any changes to interest rates.
The Fed predicts that it will not be appropriate to lower the interest rate target range until it gains greater confidence that inflation will continue to move toward its 2% target.
In addition, the Fed will continue to reduce the size of its balance sheet as planned.
The summary of economic forecasts released by the Federal Reserve that day showed that compared with December last year, the Federal Reserve raised its median GDP growth forecast for 2024 by 0.7 percentage points to 2.1%, and raised its inflation expectations for 2024 and the median core PCE price index. It was revised up by 0.2 percentage points to 2.6%.
In addition, the dot plot of the rate hike path in the summary shows that Fed officials predict that the median federal funds rate will fall to 4.6% by the end of 2024 and to 3.9% by the end of 2025.
Federal Reserve Chairman Jerome Powell said at a press conference after the regular monetary policy meeting that it may be appropriate for the Federal Reserve to start easing monetary policy at some point this year, hoping to see more data to increase confidence in achieving the inflation target.
Regarding the reduction of policy interest rates, he believes that in the long run interest rates will not return to the level close to zero a few years ago, but will be higher than this level.
On the same day, the three major U.S. stock market indexes rose rapidly after the Federal Reserve issued a statement, and expanded their gains after Powell's speech, collectively hitting a record closing high.
As of the close, the Dow Jones Industrial Average rose 1.03% to 39512.13 points; the Nasdaq Composite Index rose 1.25% to 16369.41 points; the S&P 500 Stock Index rose 0.89% to 5224.62 points.
The Wall Street Journal reported that this is the fifth consecutive time since September 2023 that the Federal Reserve has kept interest rates unchanged.
While U.S. inflation data over the past two months has raised concerns among investors, Powell said he believed inflation was falling as expected.
In addition, the Fed's dot plot of rate hike paths sent a subtle message to investors, with officials maintaining their forecast that the median federal funds rate will fall to 4.6% by the end of the year, injecting confidence into the market.
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