The Fed Holds Interest Rates Until September 2023, Potential for a Hike?

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Adi Ahdiat 10/10/2023 10:28 WIB

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The Federal Reserve held its benchmark interest rate steady in a range of 5.25%-5.5% in September 2023. However, the Fed may raise rates again due to a resurgence in US inflation.

The Fed's Interest Rate Movement (January 2020 – September 2023)

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The Fed Holds Interest Rates Until September 2023, Potential for a Hike?

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The Fed's Interest Rate Movement (January 2020 – September 2023)

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The United States Federal Reserve (The Fed) maintained its benchmark interest rate in the 5.25%-5.5% range in September 2023.

Previously, The Fed last raised interest rates in July 2023, shortly after the International Monetary Fund (IMF) released a pessimistic economic projection for the US.

In its July 2023 edition of the *World Economic Outlook* (WEO), the IMF projected that US economic growth would slow from 2.1% in 2022 to 1.8% in 2023, and further decline to 1% in 2024.

The IMF also predicted an economic slowdown in other advanced economies, including Canada, the United Kingdom, Germany, France, and Italy.

"About 97 percent of advanced economies are projected to have lower economic growth in 2023," the IMF stated in its report.

The US central bank may also raise interest rates again in the coming period.

In August 2023, the US annual inflation rate rose to 3.7%, deviating from The Fed's target of 2%.

"In determining what additional policy tightening may be appropriate to restore inflation to 2 percent, the Committee will take into account the cumulative tightening of monetary policy, its effects on economic activity and inflation, and financial developments," stated The Fed's Committee in its press release on Wednesday, September 20, 2023.

According to Erwindo Kolopaking, Director of the Economic and Monetary Policy Department at Bank Indonesia (BI), The Fed is likely to raise its benchmark interest rate in the final quarter of this year.

"The Fed is still expected to raise interest rates, initially anticipated for the third quarter (2023), but it seems to be postponed to the fourth quarter (2023)," said Erwindo, as reported by *Katadata* on Monday, September 11, 2023.

Erwindo also stated that future Fed decisions will continue to put pressure on the financial markets of developing countries like Indonesia.

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."