U.S. Stock Market Surges Following Federal Reserve's Decision on Interest Rates

The U.S. stock market experienced a surge after the Federal Reserve, the country's central bank, announced its decision to maintain stable interest rates for the third consecutive time. The decision comes as a relief for global stock markets, especially considering that the current U.S. interest rates are at their highest level in 22 years.

Despite a series of 11 interest rate hikes by the Federal Reserve since March 2022 to combat rising inflation, the central bank's announcement on Wednesday indicated a potential shift in policy. While the interest rates remained unchanged, bankers hinted at possible reductions in the coming year. This marks a departure from the previous efforts to curb inflation, which had driven U.S. interest rates to their highest point in 4 decades last summer.

The Federal Reserve's decision is expected to provide relief to the U.S. housing market, grappling with weak demand due to elevated mortgage rates. The central bank has projected a potential reduction in interest rates in 2024, possibly by up to three-quarters of a percentage point.

Following the announcement, the Dow Jones Industrial Average, the main index of the U.S. stock market, surged by 200 points. Federal Reserve Chairman Jerome Powell acknowledged the positive impact of the central bank's efforts to curb inflation, noting a decrease from the previous year. However, he emphasized that there is still a long way to go in stabilizing economic conditions.

The Federal Reserve also adjusted its inflation forecast for 2024, lowering it from 2.6% to 2.4%. It is anticipated that the central bank might initiate interest rate reductions starting in June next year, with expectations of a total reduction of 0.75% through three successive cuts of 0.25% each.