The Dow Jones Industrial Average closed on Wednesday at an historic high: above 37,000. The historic moment came hours after a major announcement from the U.S.'s central bank on possible rate cuts for next year.
The U.S. Federal Reserve signaled that while the central bank would maintain high rates not seen since 2001, the economy could see several rate cuts to come in 2024.
It's projected there could be as many as three rate cuts next year.
On Wall Street, the Dow Jones industrial Average closed at a record high of 37,090.24, moving past 37,000 for the first time, and surpassing its previous all-time high in January of 2022.
SEE MORE: Federal Reserve holds interest rates at 22-year high to end 2023
The U.S. central bank's decision to hold its main interest rate steady was widely expected. It had hiked that rate up from nearly zero early last year as it tries to slow the economy, with some down sides.
The efforts to tamp down high inflation has hurt investment prices, and it's still unclear if the moves could cause a recession, even if it does turn out to be a tame one. Inflation has calmed down a bit, compared to the level it was at when it it the peak two summers ago.
The Federal Reserve said Wednesday, "The Committee will continue to assess additional information and its implications for monetary policy. In determining the extent of any additional policy firming that may be appropriate to return inflation to 2% over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments."
Powell wants to try to balance the need to reduce inflation with efforts to prevent problems in the labor market.
Powell said, "I have always felt that there is a possibility that the economy could pull out of recession as inflation falls, and so far we are seeing that." He added that he does not believe the outcome of the central banks efforts are guaranteed.
Analysts have called this the Santa Claus rally on Wall Street. Greg McBride, chief financial analyst at Bankrate, told Scripps News, "The thing I would say is, don't focus on the short term. This is a game we play over the long term. Decades."
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