By: ADMIN |
2023-03-10 00:23:18
The Federal Reserve in December raised its benchmark policy rate by 0.5%, signaling its intention to keep squeezing the US economy. Set to 4.25% the rate has pivoted to smaller rises, a departure from big rate rises of previous months. Expected rate by Dec-2023 is 5.1%, suggesting a total of 0.75 points’ worth of rate rises still to come.
Most officials now see the rate declining to 4.1 per cent in 2024 and 3.1 per cent in 2025. Policymakers increased their forecasts for inflation next year, with the median estimate for the Fed’s preferred gauge — the core personal consumption expenditures price index (CPE) — rising to 3.5 per cent, compared to 3.1 per cent in September. In 2024, most officials anticipate it will have only declined to 2.5 per cent, still above the central bank’s target. It is forecast to decline to 2.1 per cent the following year. Inflation index of PCE in peaked at 7% in June, then fell to 6.4% in July, 6.3% in August, 6% in October and 5.5% in November.
Policymakers were more downbeat on the US economic outlook. It is set to grow just 0.5 per cent in 2023 before registering a 1.6 per cent expansion in 2024 as the unemployment rate tops out at 4.6 per cent.
As the central bank’s actions have begun to have a noticeable impact on the US economy, a debate has emerged about how much more restraint is needed to tame inflationary pressures that remain elevated in many sectors. UAE rates will mirror the US-fed rates in the foreseeable future
