(CNN) — The Federal Reserve (US central bank) announced on Wednesday that it will temporarily halt interest rate increases, keeping its benchmark lending rate at its highest level in 22 years.
The move was widely expected, after the US central bank indicated in recent weeks that it intended to wait for more data to understand how previous increases in interest rates would affect the US economy.
Since March 2022, the Fed has raised interest rates 11 times and held them steady on two occasions, including a pause in September.
Fed officials expect smaller interest rate cuts in 2024
The Federal Reserve’s latest set of economic forecasts showed that most central bank officials now expect smaller interest rate cuts next year than they expected in June.
In previous forecasts, most officials expected the central bank’s benchmark lending rate to peak in a range of 4.38-4.62% in 2024. In updated estimates Wednesday, most officials now expect the Fed’s key interest rate to end up somewhere between 4.88%. And 5.62%. . This suggests that there will be fewer cuts and that interest rates may remain high for longer than expected.
The Fed will not keep interest rates at a certain level unnecessarily, but it wants to see inflation under control before cutting them.
A severe economic contraction that leads to unemployment may prompt the Fed to cut interest rates, as it also has a mandate to ensure maximum employment.