and much tighter monetary policy through 2024 than previously expected to fight still too high inflation.
Fed officials now see the personal consumption expenditures price index at 3.3 per cent at year end, up from June's forecast of 3.2 per cent, and its overnight lending rate to be 5.1 per cent at the end of 2024, about 50 basis points higher than futures have projected. The yield on two-year Treasuries, which reflect interest rate expectations, hit 17-year highs at 5.178 per cent as futures priced in the Fed's overnight rate staying above 5 per cent through September 2024 - further out than previously projected.
"Right now the message is we're going to leave rates higher for longer to make sure we slay the inflation dragon. That means less rate cuts in 2024," said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan. Earlier in Europe, the pan-regional STOXX 600 index rose 0.91 per cent, while MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 per cent and Japan's Nikkei fell 0.7 per cent.
The yen is down 11 per cent on the dollar this year as expectations firm for US rates to stay high and Japanese rates to stay low, earlier hitting a 10-month trough of 148.17 per dollar.