Federal Reserve Foresees No Additional Interest Rate Hikes This Year

March 20, 2019 by Dan McCue
Federal Reserve Chairman Jerome Powell testifies on monetary policy, before the House Financial Services Committee on Capitol Hill in Washington, D.C., U.S., Feb. 27, 2018. (Olivier Douliery/Abaca Press/TNS)

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

Survey: Recession Odds Diminishing for U.S. Economy, But Watch for a Slowdown Economy
Survey: Recession Odds Diminishing for U.S. Economy, But Watch for a Slowdown

The nation’s top economists say a recession within the next year isn’t probable, but that doesn’t mean the U.S. economy will be worth bragging about. Experts polled for Bankrate’s Fourth-Quarter Economic Indicator survey estimate a 35 percent chance that the U.S. economy will enter a downturn... Read More

US Mulls Duties on $2.4 Billion in French Goods Over Tech Tax Foreign Affairs
US Mulls Duties on $2.4 Billion in French Goods Over Tech Tax

WASHINGTON — The U.S. proposed tariffs on roughly $2.4 billion in French products, in response to a tax on digital revenues that hits large American tech companies including Google, Apple Inc., Facebook Inc. and Amazon.com Inc. “France’s digital services tax discriminates against U.S. companies,” the office... Read More

Online Sales Break Black Friday Record as Clicks Beat Queues In The News
Online Sales Break Black Friday Record as Clicks Beat Queues

NEW YORK — Black Friday hit a record $7.4 billion in U.S. online sales as many shoppers spent the day clicking instead of lining up to buy. It was the second-biggest U.S. online sales day ever, behind 2018 Cyber Monday’s $7.9 billion, according to a survey... Read More

Trump Dispenses Billions in Aid to Farmers, Hoping to Shore Up Rural Base Agriculture
Trump Dispenses Billions in Aid to Farmers, Hoping to Shore Up Rural Base

WASHINGTON — Moving to offset the impact his trade war has had on rural America, President Donald Trump has bypassed Congress to send some $20 billion in aid to farmers, mostly going to a bundle of states that are essential to his reelection chances next year.... Read More

House Votes to Renew Export-Import Bank Charter Over GOP Opposition Trade
House Votes to Renew Export-Import Bank Charter Over GOP Opposition
November 18, 2019
by Dan McCue

WASHINGTON - The House voted on Friday to renew the charter of the Export-Import Bank, the U.S. agency that provides loans and other help to foreign buyers of U.S. exports, despite opposition from Republican lawmakers. Despite the bank having historically enjoyed strong bipartisan support, only 13... Read More

Congress Considers Proposals to Help Immigrants Start Small Businesses Business
Congress Considers Proposals to Help Immigrants Start Small Businesses
November 11, 2019
by Tom Ramstack

Business leaders in California appealed to Congress Friday to expand financial assistance to immigrants trying to start their own businesses. They said small government investments can create big payoffs when immigrants start successful businesses that pay taxes and employ other persons. The U.S. Small Business Administration... Read More

Straight From The Well
scroll top