The Federal Reserve keeps interest rates steady and revises economic forecasts.

The Federal Reserve's economic outlook indicates a more robust economy and an increase in interest rates.

Highlights

• "Fed leaves the federal funds rate unchanged, consistent with the expectations of analysts."
• "As per the Fed's forecasts, the U.S. economy continues to perform well, and the anticipated unemployment rate remains at a low level."
• "The Federal Reserve anticipates an increase in rates for 2024 compared to its projections from June."

On September 20, the Federal Reserve announced its decision on interest rates, opting to keep the target range for the federal funds rate at 5-1/4 to 5-1/2 percent, aligning with analysts' expectations.

The Fed emphasized its strong commitment to bringing inflation back to its 2% target and reaffirmed its plans to continue reducing holdings of Treasury securities, agency debt, and mortgage-backed securities as previously outlined.

While acknowledging a recent slowdown in job gains, the Fed highlighted that overall job growth remains robust and the unemployment rate is low. The labor market's status is a significant factor guiding the Fed's decision-making process.

Crucially, the Fed restated its intention to gauge the necessity of further policy adjustments to attain the 2% inflation goal based on a range of data.

The Fed also unveiled its economic projections, showing an increase in the federal funds rate projection for 2024 from 4.6% to 5.1%. Additionally, the forecasted change in real GDP for 2023 improved from 1.0% to 2.1%, while the Unemployment Rate projection for 2023 declined from 4.1% to 3.8%.

Following the FOMC Statement, the U.S. dollar strengthened, driven by market response to the Fed's stance on potential policy adjustments and the updated economic projections. Gold prices retreated from their highs in response to the U.S. dollar's strong rally.

Amid concerns about the Fed's potentially hawkish approach, the S&P 500 dipped below the 4450 level.

Traders should be mindful that Powell's press conference is imminent and anticipate his remarks to significantly influence market dynamics, potentially leading to rapid market movements.