Federal Reserve Chairman Jerome Powell announced on Wednesday that interest rates will remain unchanged and could stay there for some time to come: the Fed is predicting no other rate changes on the horizon in 2020, signaling that 2019’s three rate cuts brought the U.S. to a stable place.
Today’s announcement that the rate will remain at the 1.5 percent to 1.75 percent range marks the Fed’s final monetary policy decision for 2019.
The Fed cut rates this year by a quarter of a point three times since July. Powell said on Wednesday the earlier cuts helped keep the U.S. economy on track and assuming incoming data holds up, the current policy stance will “likely” remain appropriate.
“It’s been very challenging to get inflation to be at target … But I think we’re using our tools as best we can to meet that challenge.”
Previous interest cuts were seen as protecting the U.S. economy from negative fallout from the U.S. trade war with China and slow global growth. Powell signaled the cuts were successful and said: “our economic outlook remains a favorable one despite global developments and ongoing risks.”
When asked by a reporter why the Fed has dropped its previous caveat from October that noted “uncertainties about this outlook remain,” Powell responded “we’ve put now in place policies that we think are appropriate to address [global developments and muted inflation pressures.]”
Looking forward, Powell indicated that with a strong household sector, the Fed expects economic growth to continue and said if the proposed USMCA deal is enacted, it would remove some uncertainty and be positive for the U.S. economy.
At the beginning of Wednesday’s press conference, Powell paid homage to former Fed Chairman Paul Volcker, who died this week, saying “what is perhaps most admirable about him was his character.”
Most members of the Federal Reserve’s interest-rate setting committee supported further reductions to its key interest rate this year, minutes from last month’s meeting showed.
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