Shafaq News / The Federal Reserve on Wednesday said it is holding its benchmark interest rate steady, extending a reprieve for borrowers after the fastest series of hikes in four decades. The central bank also indicated it expects three rate cuts in 2024.

The Fed said in its policy statement that it will maintain the federal funds rate in a range of 5.25% to 5.5%, marking the third consecutive pause since July, when it last raised rates. Federal Bank officials also signaled the benchmark rate could be cut by 0.75% percentage point in 2024, according to a chart that documents their projections.

"The appropriate level [of the federal funds rate] will be 4.6% at the end of 2024" if the Fed's economic projections hold up, Fed Chair Jerome Powell said during a conference call to discuss today's decision.

Stocks rose modestly after the Fed's statement, with the S&P 500 gaining 0.5% immediately after the release of the projections signaling the expected path for rates next year. Rate cuts by the Fed would reduce borrowing costs across the economy, providing relief to consumers who have been slammed by higher costs for all types of loans, from mortgages to credit card debt.

"The market is celebrating that the Fed dots moved closer to the market's," said Jon Maier, chief investment officer at investment company Global X.

Fed officials have raised the federal funds rate 11 times since starting the tightening cycle in March of 2022 to combat the hottest inflation in 40 years. The strategy has largely succeeded in dousing inflation and even led prices to fall for some products, such as used cars, furniture and appliances.

But higher borrowing costs have priced many homebuyers out of the market and added to the expense of buying cars, carrying credit card debt and taking out loans.

(CBS)