The Federal Reserve predicted that it will keep interest rates the same through 2020 . FOX Business’ Edward Lawrence with more.
The Federal Reserve unanimously voted to hold interest rates steady during its last policy meeting of the year on Wednesday, indicating that it’s hitting pause on future action through 2020.
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In a move that was widely expected, the Federal Open Market Committee, during its two-day meeting this week, held the benchmark federal funds rate steady at 1.5 percent to 1.75 percent.
So far this year, the Fed has made three minor interest rate cuts, part of what Chairman Jerome Powell described as a “mid-cycle adjustment.” Powell acknowledged in October that it would take a “really significant” rise in inflation above the Fed’s preferred 2 percent benchmark before policymakers reversed course and returned to interest rate hikes.
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In their statement accompanying the decision, policymakers at the U.S. central bank projected that interest rates will remain unchanged through 2020, though said they will continue to monitor conditions as they develop.
Federal Reserve Board Chair Jerome Powell testifies on the economic outlook, on Capitol Hill in Washington, Wednesday, Nov. 13, 2019. (AP Photo/Jose Luis Magana)
“The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective,” the statement said.
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“The Committee will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures, as it assesses the appropriate path of the target range for the federal funds rate,” it added.
The language reinforces previous Fed assessments that the U.S. economy is in a “good place” and will remain there if current conditions persist.
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The so-called dot plot of individual members’ future projections showed little chance of a rate cut or increase in 2020, with just four members anticipating the need for a quarter-point increase next year. A majority of officials saw the need for at least one rate hike in 2021.
“We are seeing more consensus that monetary policy is on track,” said Tony Bedikian, head of global markets at Citizens Bank. “We had a very strong jobs number last week and Fed policymakers seem to have struck a balance between low unemployment and moderate inflation in a slow, steady growth environment.”
Policymakers again projected the U.S. economy to grow by a 2.2 percent annualized rate in 2019, followed by continuous, but modest, slower growth in the coming years: 2 percent in 2020 and 1.9 percent in 2021.
