The Federal Reserve today put a halt to raising interest rates. From March 2022 to 2023, the Fed raised interest rates in 10 consecutive meetings. According to new projections by the Fed though, not only does it see improvement for the economy, it’s confident that the US will completely avoid a recession.
Also Read: Federal Reserve Pauses Interest Rate Hikes
Fed policymakers expect the economy to grow 2.1% this year. This is more than twice as fast as what they projected in June 2023. In addition, they expect the national unemployment rate to remain at 3.8%, compared to a previously projected rise to 4.1%. In a statement, the Fed says they “see no recession until at least 2027 and a very smooth landing.”
“The U.S. banking system is sound and resilient”
FOMC Statement
While this may sound like good news for the near future, there are still precautions that should be taken, and the US shouldn’t jump for joy just yet. Surging oil prices and the auto worker strike can still affect the economy and cause a temporary boost in inflation. In addition, there is still a looming threat of a government shutdown, which can halt economic growth.
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Despite the decision to halt rates this month, the Fed is still split on future interest rate hikes. 12 members project one more will be called, while the other seven say that the central bank will be able to hold where it is. However, interest rates are safe for the next month.