The US Federal Reserve is leaving interest rates unchanged and still sees three cuts ahead this year. However, an interest rate cut is removed in 2025 in the updated interest rate path.
"The committee does not expect that it will be appropriate to lower the interest rate until it has gained greater confidence that inflation will go down permanently to 2 percent," writes the Fed in the press release.
The Fed has also changed the growth forecast for the US economy. GDP is now expected to grow by 2.1 percent during the year, compared to the latest forecast of 1.4 percent.
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Expert: Naturally if this pushes stocks up
As expected, the US central bank keeps the interest rate unchanged in the range of 5.25-5.50 percent. At the previous outlook, the Fed saw three cuts in 2024 and three next year. Now you see only two reductions next year.
"Something hawkish," writes Robert Bergqvist, senior economist at SEB, on X. He comments that the interest rate is too restrictive and that the bank still believes in a reduction in June.
"Investors were concerned that the Fed would pull back on expected rate cuts this year, so keeping three cuts in the interest rate path will naturally push stocks up and bonds down," said Bryce Doty at Sit Investment Associates, according to Bloomberg.
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