Source: NBC News
Not only did the Federal Reserve decide Wednesday not to raise interest rates, but it also indicated that no more hikes will be coming this year.
In a unanimous move that coincides with market expectations and demands, the central bank’s policymaking Federal Open Market Committee (FOMC) took a sharp dovish turn from policy projections just three months earlier.
Committee members had estimated in December that two rate hikes would be appropriate in 2019 after four increases in 2018. They also pointed to at least another one before ending a round of policy tightening that began in December 2015.
However, there now appears to be no likelihood of a hike unless conditions change significantly. In its post-meeting statement, the FOMC indicated it would remain “patient” before adopting any further increases.
The Fed currently holds its benchmark funds rate in a range of 2.25 percent to 2.5 percent. The rate is used as a key for determining interest on most adjustable-rate consumer debt, like credit cards and home equity loans.
The move came along with reduced expectations in GDP growth and inflation and a bump higher in the unemployment rate outlook.
For a central bank not so long ago intent on normalizing policy from its financial crisis-era accommodation levels, the developments at this week’s meeting represent a striking change in direction.
The Fed had held its benchmark rate near zero for seven years as it looked to stimulate the housing market and overall economic activity. Its low-rate programs coincided with the longest bull market on record for stocks.
However, Chairman Jerome Powell, and before him…
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