The interest rate in the US will remain at its level, the highest in 23 years

The interest rate in the US will remain at its level, the highest in 23 years and is expected to decrease once in 2024. The Federal Reserve, the American central bank, published yesterday (Wednesday) its interest rate decision and the forecasts of the members of the committee that determines the interest rate policy. The committee decided to keep the interest rate at its level The highest, 5.5%, given low unemployment and higher inflation than the target.

The committee’s announcement states that in recent months no significant progress has been made towards the 2% inflation target. It was also written that economic activity continues to grow at a healthy rate and that the unemployment rate remains low.

Alongside the interest rate decision, the Federal Reserve published the forecasts of the members of the Committee for Open Markets, which determines the interest rate policy and their assessment of the correct interest rate policy in the future. The majority of committee members, 15 out of 19, support lowering the interest rate by 0.25 to 0.5 percentage points during 2024. The remaining four consider it necessary to keep the interest rate at its current level at least until 2025. The prospect of lowering the interest rate signals a hardening of the Federal Reserve’s position. Last March, committee members estimated that interest rates would fall at a much faster rate of about a percentage point during 2024.

The committee’s growth forecast indicates a growth of 2.1% in 2024 and 2% in 2025. The forecast for 2025 is optimistic compared to the forecasts of theOECD and theCBO (Congressional Budget Office), who predict growth of 1.8% in the US next year. Federal Reserve officials predict that unemployment will grow to 4.2% in 2025, from 4% in 2024.

The unemployment rate in the US is low in historical terms but has been on the rise for the past two years and even more so since last August. In May, the rate stood at 4%, which is 6.6 million Americans. According to these numbers, an addition of 0.2 percentage points to the unemployment rate, as predicted by senior Federal Reserve officials, Means an addition of about 330 thousand Americans to the unemployment circle, as measured by the inflation index.PCE, is expected to reach 2.6% in 2024 and 2.3% in 2025. Last April a rate of 2.7% was recorded.

The quoted forecasts refer to the median forecast; Half of the committee members predicted an equal or higher figure and half an equal or lower figure.