Federal Reserve Foresees No Additional Interest Rate Hikes This Year

March 20, 2019 by Dan McCue

The Federal Reserve’s policymaking Federal Open Market Committee said Wednesday there will be no more interest rate hikes this year, baring a significant, unforeseen change in the economy.

The unanimous decision by the committee following its two-day meeting this week was widely expected, but it does represent a marked departure from the body’s consensus just four months ago.

In December the committee suggested there would be at least two rate hikes in 2019, after four increases in 2018. It also implied at that meeting that a third rate hike in 2019 was not out of the realm of possibility.

With Wednesday’s decision, the Federal Reserve will keep its benchmark fund rate in a range of between 2.25 percent and 2.5 percent.

The rate is used in determining interest on most adjustable-rate consumer debt, including credit cards, mortgages and home equity loans.

In the statement explaining its decision, the committee stated “recent indicators point to slower growth of household spending and business fixed investment in the first quarter,” but it also noted the labor market remains strong.

Inflation also has declined due largely to a drop in energy prices, the statement added.

The Federal Reserve forecast economic growth will top off at 2.1 percent this year, lower than its estimate of 2.3 percent in December. It also sees inflation reaching 1.8 percent this year, a 0.1 percentage point decline.

Despite the predictions of a slowdown in the economy during the second half of the year, Federal Reserve Chairman Jerome Powell said at a Wednesday afternoon news conference that “our outlook is a positive one.”

Powell stressed that the unemployment rate is still low, incomes are rising and surveys of consumers and businesses suggest that confidence in the economy remains.

The unemployment rate for this year is now seen at 3.7 percent, up 0.2 percentage points from December.

The market committee also announced Wednesday that the Fed’s program to reduce its bond holdings will end in six months.

In the wake of the 2008 global financial crisis, the Federal Reserve undertook three rounds of bond buying that helped provide liquidity to financial markets.

The program pushed the Fed’s balance sheet to $4.5 trillion, which it has sought to lower through a program that allowed proceeds from the bonds to come off its balance sheet each month.

Currently, it is allowing $30 billion in Treasury proceeds and $20 billion from mortgage-backed securities to come off, a process known as “quantitative easing,” while reinvesting the rest.

The committee said the amount for Treasury proceeds will drop to $15 billion in May.

Since October 2017, when the quantitative easing began, the Fed has reduced its bond holdings by about $450 billion.

Economy

NASA Test Flights in Reno Aim to Set Stage for Future Drone Package Deliveries Science
NASA Test Flights in Reno Aim to Set Stage for Future Drone Package Deliveries
May 24, 2019
by Dan McCue

NASA launched the final stage of its four-year program to create a national traffic management system for drones this week, a move that brings home delivery of packages, medical supplies and even pizza by small unmanned aircraft one step closer to reality. Earlier this year, the... Read More

As Summer Beckons, New Study Finds Beer Adds Cool $328 Billion to U.S. Economy Economy
As Summer Beckons, New Study Finds Beer Adds Cool $328 Billion to U.S. Economy
May 24, 2019
by Dan McCue

Beer produced in America contributes $328 billion to the national economy annually, while helping to employ 2.1 million in industries ranging from farming to construction, according to a new study from the Beer Institute and the National Beer Wholesalers Association. The release of the study, called... Read More

New Democrat Coalition Releases Technology Task Force Goals for the 116th Congress Technology
New Democrat Coalition Releases Technology Task Force Goals for the 116th Congress
May 23, 2019
by Dan McCue

The New Democrat Coalition Technology Task Force announced its goals for the 116th Congress, saying it will place an emphasis on fostering innovation while improving the nation's technological infrastructure and updating privacy protections. “Technology is changing the world and enhancing our lives every day," said Representative... Read More

Blue Dogs Call for Bipartisan Infrastructure Bill to Expand Broadband Internet Access Infrastructure
Blue Dogs Call for Bipartisan Infrastructure Bill to Expand Broadband Internet Access
May 21, 2019
by Dan McCue

Representatives Joe Cunningham, D-S.C., and Mikie Sherrill, D-N.J., co-chairs of the Blue Dog Task Force on Infrastructure and Job Creation, joined with Representatives Abigail Spanberger, D-Va., and Xochitl Torres Small, D-N.M., their counterparts on the Blue Dog Task Force on Rural Opportunity, Tuesday to call for... Read More

White House to Lift Steel, Aluminum Tariffs on Canada, Mexico Trade
White House to Lift Steel, Aluminum Tariffs on Canada, Mexico
May 17, 2019
by Dan McCue

President Donald Trump revealed Friday that his administration has reached an agreement with Canada and Mexico to lift tariffs on steel and aluminum, ending a standoff that threatened to derail ratification of the president's new North American trade agreement. Speaking before the National Association of Retailers... Read More

Renewable Energy Surpasses Coal As Source of US Energy, Researchers Say Climate
Renewable Energy Surpasses Coal As Source of US Energy, Researchers Say
May 16, 2019
by Dan McCue

For the first time in history, renewable energy surpassed coal earlier this month as a source of electricity generation in the United States, the Brookings Institution reported Wednesday. The paper underlying the report attributes this remarkable development to U.S. municipalities and businesses striving to fill the... Read More

Straight From The Well
scroll top