KL Winterbourne Associates - Fed to Keep Rates Steady

KL Winterbourne Associates - Fed to Keep Rates Steady

Tokyo, Japan - 03/20/2021 — With the US economic recovery gaining traction, the Fed has decided to hold interest rates at near zero.

Following the conclusion of this week’s meeting, the US Federal Reserve upgraded its growth forecast for the US economy and decided to maintain interest rates at their current level of near zero. Although some members of the Federal Open Market Committee are more in favor of an interest rate increase, given the anticipated acceleration of the economic recovery, economists at KL Winterbourne Associates believe US interest rates will likely be kept low until 2024.

With strong stimulus packages and a rapidly advancing vaccination campaign, KL Winterbourne Associates economists say the outlook for US economy is better than it was three months ago. The economic recovery is progressing more quickly than anticipated and this has prompted optimism from the country’s central bank.

Expectations for economic expansion increased significantly given the upturn in recent indicators of economic activity. The Federal Open Market Committee anticipate that US GDP will grow by 6.5% in 2021, up from an earlier estimate of 4.2%.

Growth for 2022 and 2023 is expected to reach 3.3% and 2.2% respectively with a target of 2.3% per year thereafter.

Inflation is also expected to increase. The FOMC forecasted that inflation will reach 2.2% by the end of this year. Unemployment is expected to decrease to 4.5% by the end of 2021. This is an improvement on the earlier estimate of 5%.

“Despite positive changes in a range of economic indicators, the Fed seems determined to maintain its current policy course. While more members of the FOMC are warming to the idea of an interest rate hike, it appears unlikely that borrowing costs will be increased before 2024,” said a senior economist at KL Winterbourne Associates. 

Media Contacts:

Company Name: KL Winterbourne Associates
Full Name: Shohei Muramatsu
Phone: +81345909387
Email Address: Send Email
Website: klwinterbourneassociates.com