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Fed rate cuts could spur risk-taking in 2024

A weaker US dollar may allow Asian central banks more flexibility to support their economies with looser monetary policy

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Ben Paul

Ben Paul

Published Mon, Dec 18, 2023 · 05:00 AM
    • The Fed has changed the wording of its policy statement last week, to indicate that another rate hike is now unlikely.
    • The Fed has changed the wording of its policy statement last week, to indicate that another rate hike is now unlikely. PHOTO: BT FILE

    CHRISTMAS may have come early for investors positioned for a loosening of global monetary policy.

    At its final meeting for 2023 last week, the US Federal Open Market Committee (FOMC) held the federal funds rate unchanged at 5.25 to 5.5 per cent for a third time, and tweaked the wording of its policy statement to indicate that another hike is now unlikely.

    The latest summary of economic projections by FOMC meeting participants also showed none of them expect rates to be hiked any further. Their median projection is for the federal funds rate to end 2024 at 4.5 to 4.75 per cent – which implies three cuts of 25 basis points each next year.

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