2023 US Federal Reserve Interest Rates: No Cuts Expected

US Federal Reserve Chairman Jerome Powell said he does not expect a cut in the base interest rate this year and intends to raise it even more.

Jerome Powell announced this on Wednesday at a press conference following a two-day meeting of the Federal Open Market Committee.

Asked if analysts were correct in believing that the Fed would cut interest rates after the May committee meeting, Powell replied: Most likely, committee members do not see the possibility of lowering the rate this year, they are not considering… This is not our baseline forecast.

He added that most committee members expect another 0.25% rate hike in 2023.

“We are definitely on track to raise rates further,” Powell said. “Just a couple of weeks ago, it looked like we would have to raise more rates throughout the year than we planned at the December meeting … The assessment is that we need more rate hikes as always.” We will be guided by incoming data and changing expectations, in particular our assessment of the unintended consequences of tightening credit.

The head of the Financial Supervisory Authority was also asked if the committee was looking into the possibility of suspending the price increase process due to problems with banks, and he said, speaking about the decision to increase the price, the average rate is only 25 basis points – up 4.75% – 5.0%.

The Fed cut its 2023 US GDP growth forecast to 0.4% from 0.5%, while its 2024 economic growth forecast is cut to 1.2% from 1.6% and improved to 1.9% in 2025 from 1.8%.

Source: TASS