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Financial News: Federal Reserve Leaves Rates Unchanged For Third Straight

Federal Reserve Leaves Rates Unchanged For Third Straight Meeting

05/01/2019 - 14:19:00 (RTTNews)

(RTTNews) - As widely expected, the Federal Reserve announced on Wednesday that it has decided to leave interest rates unchanged.

The Fed maintained the target range for the federal funds rate at 2.25 to 2.50 percent for the third consecutive meeting.

The central bank said information received since its previous meeting in March showed economic activity rose at a solid rate.

After the March meeting, the Fed noted the pace of economic growth had slowed from the solid rate in the fourth quarter.

The Fed said in its latest statement that the labor market remains strong but pointed out slower first quarter growth in household spending and business fixed investment.

With regard to inflation, the central bank said lower energy prices had contributed to lower annual inflation but noted inflation for items other than food and energy remains near 2 percent.

"On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of longer-term inflation expectations are little changed," the Fed said.

The Fed said it continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near its symmetric 2 percent objective as the most likely outcomes.

Nonetheless, the central bank reiterated it will be patient as it determines future adjustments to interest rates due to global economic and financial developments and muted inflation.

The announcement from the Fed comes a day after President Donald Trump urged the central bank to slash interest rates by as much as a full percentage point.

"Our Federal Reserve has incessantly lifted interest rates, even though inflation is very low, and instituted a very big dose of quantitative tightening," Trump said in a post on Twitter.

He added, "We have the potential to go up like a rocket if we did some lowering of rates, like one point, and some quantitative easing."

Some analysts accused the Fed of capitulating to Trump's demands by revealing after its previous meeting that officials no longer expect to raise rates this year.

The Fed is scheduled to announce its next monetary policy decision after a two-meeting on June 18-19, with CME Group's FedWatch Tool currently indicating a nearly 71 percent chance rates will be left unchanged.

The FedWatch Tool shows a nearly 27 percent chance that the Fed will lower interest rates by 25 basis points to 2 to 2.25 percent.

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