Fed Keeps Rates Unchanged; Market Awaits "Soft Landing"

The Federal Reserve has left its benchmark interest rate unchanged for the second time in its last three meetings, indicating that it is moderating its fight against inflation as price pressures have eased, according to the Associated Press (AP).

This optimistic scenario, known as a "soft landing," is what economists are hoping for.

The Fed's policymakers also indicated that they anticipate raising rates once more this year and foresee their key rate remaining higher in 2024 than most analysts had expected.

As their latest policy meeting concluded, the 19 members of the Fed's rate-setting committee expressed increasing optimism that they would succeed in slowing inflation to their 2% target without causing the deep recession that many economists had feared.

This optimistic scenario, known as a "soft landing," is what economists are hoping for.

In a new set of quarterly projections, the policymakers showed that they anticipate faster economic growth and lower unemployment for this year and the next than they had predicted just three months ago.

Even with solid growth on the horizon, they also anticipate that inflation will continue to subside.

These expectations suggest that Fed officials believe they can "achieve gradual disinflation without disruption to the labor market or triggering a significant recession," as stated by Subadra Rajappa, Head of Rates Strategy at Societe Generale.

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