US Fed flags end of rate hikes, easing in 2024

The news: The Federal Reserve has signalled the tightening of US monetary policy may be at an end and that lower borrowing costs are likely in 2024.

The numbers: The US central bank overnight held its policy rate steady in the 5.25%-5.50% range. New economic projections also showed 17 of 19 Fed officials expect the policy rate will be lower by the end of 2024 than it is now — with the median projection showing it falling three-quarters of a percentage point.

The context: Fed Chair Jerome Powell sought to temper the dovish outlook by flagging uncertainty and said he couldn't definitively rule out higher rates at this point. "While we believe our policy rate is at or near its peak for the tightening cycle, the economy has surprised forecasters," Powell said.

The projections closely track the "soft landing" scenario that has become the base case for US central bankers hoping that inflation continues to slow without a recession and sharp rise in unemployment. US stocks jumped following the news, while the US dollar dropped against a basket of currencies and US Treasury yields also fell further.