Fed Holds Key Interest Rate Steady

December 14, 2023
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Inflation keeps coming down, the labor market keeps coming into balance. So far, so good.

Federal Reserve Chair Jerome Powell in a news conference as the nation’s central bank’s held its key interest rate steady. While this marks the third consecutive decision to hold rates steady, Fed officials indicated possible rate cuts in 2024.

Why It Matters: The Fed decided leave the federal funds rate (which helps set other borrowing rates, such as interest rates for credit cards, car loans and mortgage rates) between 5.25%-5.5%, the highest it has been in more than 20 years. Leaving this rate at a higher level keeps borrowing money more expensive for consumers as the Federal Reserve works to combat elevated inflation by decreasing demand.

Worth Noting: Unlike previous announcements from the Fed, this week’s decision indicated three possible rate cuts in 2024, signaling a potential cooldown for borrowers. “While the weather is still cold outside, the Fed has suggested a potential thawing of frozen high interest rates over the next few months,” explained chief investment officer of global fixed income at investment management company BlackRock, Rick Rieder.

Read More:

Fed holds rates steady, indicates three cuts coming in 2024 (CNBC)

Fed holds rates steady as inflation eases, forecasts 3 cuts in 2024 (USA Today)

by Emily Hooker, based in Texas

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