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The Federal Reserve leaves interest rates unchanged

However, many committee members think another hike this year is still warranted.

21 September 2023

As expected, the Federal Reserve (Fed) decided that the best course of action was no action at the current time. Leaving rates unchanged at its committee meeting, the accompanying policy statement showed that a majority of members think another hike this year is however still warranted despite this month’s pause. The amount of easing that the market expects for next year were dashed with its “dot-plot” forecasts indicating just 50 bps of cuts projected in 2024 and the equity and bond markets are having to price in higher for longer yet again albeit with a slightly stronger economic forecast. A hawkish tilt then due to the higher dot-plot amendments accompany a Fed predicting a rosier outlook for the economy and this will leave both bulls and bears equally happy or equally confused. In ‘Fedspeak’ that amounts to mission accomplished. In reality, the lack of real success in forecasting using dot plots will mean the Fed has pointed the ship straight into any potential economic headwinds and course corrections will most likely be necessary.

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Charles Hepworth

Investment Director
My Insights

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