The Fed has kept interest rates steady at their highest level in over 23 years. However, they indicated that they may begin lowering rates by June due to the economy still growing and inflation starting to ease. This change in outlook is a result of higher-than-expected inflation data at the start of 2023. The Fed's projections show a likelihood of three quarter-percentage point cuts in 2023 and possibly more in subsequent years.
Despite a more positive economic growth outlook, the Federal Reserve still predicts three interest rate cuts in 2024. This is because inflation is still higher than the Fed's target of 2%, and recent data suggests it may not be declining as quickly as hoped. The median projection for the federal funds rate is 4.6% in 2024, down from the current 5.25%-5.50% range.
Despite significant stock market gains led by tech giants like Nvidia, experts caution against labeling it a bubble. Unlike the dotcom era, there is less speculation and leverage in the market. However, concerns linger about the bull market's sustainability due to slowing economic growth and weaker productivity compared to the 1990s. The performance of large tech companies is supported by strong earnings and fundamentals.
