With the current strong economic data suggesting a likelihood of a “soft-landing,” the U.S. Federal Reserve’s Open Market Committee decided at its most recent meeting that monetary policy will remain restrictive “for some time” to ensure it reaches of its two percent inflation target. This means that interest rates will stay relatively high for the foreseeable future.
Economic forecasts prepared by Fed staff present a range of expected economic growth over the second half of 2023 and into 2024, showing a slight acceleration in economica growth over the first half of the year, but a slowing from its third-quarter rate.
Despite its decision to tighten monetary policy aggressively since March 2023, the U.S. economic growth has managed to remain strong and the labor market relatively healthy. As Powell noted, the 230 Open Market Committee is still prepared to raise interest rates to combat inflation, should the need arise.
All in all, the outlook for the U.S. economy during the coming months appears solid, even though the Fed has announced expectations to keep policy restrictive for awhile.
