Fed megaphone: It is expected that the Fed will maintain the Interest Rate slightly above the neutral level in the future

On November 8th, Nick Timiraos, a reporter for The Wall Street Journal, commented on the November interest rate decision of the Federal Reserve, saying, “The Fed decided to drop interest rates by 25 basis points on Thursday, but released more uncertainty about the pace of further rate cuts. The Fed is still trying to prevent the drag on the economy from the significant rate hikes of the past two and a half years. In a similar time frame, investors in the interest rate futures market have continuously lowered their expectations for the Fed’s rate cuts over the next year. According to Citibank, they now believe that the Fed will drop the interest rate to around 3.6% by 2026, compared to their estimate of 2.8% in September. Officials are trying to bring interest rates back to a more normal level, one that neither stimulates nor slows economic growth, but they do not know what a normal interest rate is. Therefore, they may use the economic performance in the coming months as a guide. This means they will maintain interest rates slightly above normal or neutral levels.” (FX168)