Fed leaves policy interest rate unchanged, but suggests possibility of becoming dovish in 2024 | CoinDesk JAPAN

On the 13th, the Federal Reserve (Fed) kept its target for the federal funds rate unchanged at 5.25% to 5.50%, as expected, but at the same time lowered its outlook for interest rates by the end of 2024 from 5.1% to 4.6%.

“Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, employment, and inflation,” the Fed said in a statement, adding, “The extent of these effects remains unclear.”

Alongside the interest rate announcement, the Fed also released its quarterly economic outlook. The forecast for core inflation at the end of 2023 has been lowered to 3.2%, compared to 3.7% expected three months ago. Core inflation is now expected to be 2.4% at the end of 2024, compared to the previous forecast of 2.6%. The forecast for real GDP growth in 2024 has been lowered from 1.5% to 1.4%.

The Fed now expects the federal funds rate to remain at 4.6% at the end of 2024, compared with its forecast of 5.1% three months ago, suggesting a 75 basis point cut next year.

The price of Bitcoin (BTC) has risen by just under 1% since the rise a week ago, and is currently at $42,370 (approximately 5,931,800 yen, equivalent to 140 yen to the dollar), an increase of 2.2%. . Interest rates have fallen in traditional markets. The yield on the 10-year U.S. Treasury note fell 12 basis points to 4.08%, its lowest level since August. U.S. stock market indexes are hitting new highs, with the S&P 500 currently up 0.6%. Gold rose just under 1% to $2013, with the dollar index down about 0.5%.

Until today, the market had hardly expected any action at the Fed meeting in late January, but the Chicago Mercantile Exchange’s (CME) FedWatch tool shows a percentage expecting a rate cut at the subsequent March meeting. had reached nearly 50%.

｜Translation and editing: Rinan Hayashi
｜Image: Helene Braun/CoinDesk
｜Original text: Federal Reserve Holds Policy Steady, but Indicates More Dovish 2024