When Will Interest Rates Drop? New Timeline as Housing Market Struggles

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The U.S. Federal Reserve paused interest rates at their current levels but left room to hike depending on the economic conditions.

The U.S. Federal Reserve held interest at the current range of 5.25 to 5.5 percent on Wednesday as policymakers see progress in their fight to bring down inflation to target level but left themselves room to hike rates again this year should conditions demand it.

Fed chair Jerome Powell told reporters that the central bank was committed to bringing down inflation to the goal of 2 percent and that the full effect of interest raises that began in March of last year to a now 22-year high have yet to be fully felt in the economy giving policymakers the option of being careful.

The central bank projected that rates will hit 5.6 rate by the end of the year and will start to come down next year and hit just under 3 percent by 2026. The majority of policymakers—12 out of the 19—think there could be one more rate increase this year but others suggested they could stay put at the current range.

Federal Reserve Board Chairman Jerome Powell speaks during a news conference after a Federal Open Market Committee meeting. The Fed said it will hold the benchmark borrowing rate to a range of 5.25% to 5.5%.But in a slight surprise, officials projected the U.S. to grow by 2.1 percent this year, double their estimates from June. They suggested that core inflation, the rate that strips out the volatile energy and food prices, will hit 3.

The projections bolster the view by some economists that the U.S. will hit a"soft landing" in 2024. This is the view that while the economy was expected to slow down due to high interest rates, the unemployment rate would stay relatively low as inflation moderated.He added that while inflation expectations appeared"well-anchored," the fight was not over.

 

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