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Interest Rates Will Not Increase

Interest Rates Will Not Increase. According to a survey of economists, the central bank of the United States (US), namely the Federal Reserve (The Fed), will maintain its benchmark interest rate stable at its meeting on October 31 – November 1 2023.

More than 80% of economists, or 90 of 111 respondents in a survey on October 13-18 2023, predict that the Federal Open Market Committee (FOMC) will maintain interest rates in the range of 5.25%-5.50% at its next meeting.

This is in line with market expectations and if realized would be the first time in the cycle that the Fed has decided not to raise interest rates at two consecutive meetings.

Then, 26 of 111 economists saw the possibility of one more rate hike in 2023, matching the Fed’s median “dot plot” projection last month. Only one economist predicts two more rate hikes.

On the other hand, although the majority of economists predict there will be a cut in interest rates before mid-2024, a small portion of economists, namely around 45%, currently do not see a cut in interest rates until the second half of 2024 or later. This response was up 29% from the previous poll.

As is known, in the weeks since the Fed’s meeting in September 2023, where they decided not to raise interest rates, inflation has been higher than expected and the number of workers employed has suddenly increased in the last eight months, providing support for about a quarter economists surveyed expected another rate hike.

However, financial conditions have also become tighter since then with long-term Treasury bond yields rising to their highest levels in years.

Some Fed officials have indicated that it could be an alternative to raising interest rates further, although they have stressed that interest rates will remain high for a longer period of time.

Interest Rates Will Not Increase. But expectations regarding the Fed’s policy may also change after Fed Chair Jerome Powell gave a speech at the Economic Club of New York on Thursday local time (19/10).

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