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Financial News: Federal Reserve Leaves Rates Unchanged After Three Straigh

Federal Reserve Leaves Rates Unchanged After Three Straight Cuts

12/11/2019 - 14:41:00 (RTTNews)

(RTTNews) - After three consecutive interest rate cuts, the Federal Reserve on Wednesday announced its widely expected decision to leave rates unchanged.

The Fed said its Federal Open Market Committee decided to maintain the target range for the federal funds rate at 1-1/2 to 1-3/4 percent on the heels of three straight quarter-point reductions.

The FOMC judged that the current stance of monetary policy is appropriate to support a sustained economic expansion, strong labor market conditions, and inflation near its symmetric 2 percent objective.

The central bank maintained its assessment of the economy, reiterating that recent data indicates the labor market remains strong and that economic activity has been rising at a moderate rate.

The Fed also once again noted that while household spending has been rising at a strong pace, business fixed investment and exports remain weak.

The FOMC noted it 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 for rates.

The vote to leave interest rates was unanimous, as Kansas City Fed President Esther George and Boston Fed President Eric Rosengren joined in after voting against the past three rate cuts.

Economic projections provided by the Fed along with the decision show a majority of FOMC participants expect interest rates to remain unchanged throughout 2020.

The projections for GDP growth in 2019 and the coming years were unchanged from September, while the unemployment rate is expected to come in slightly lower than previously forecast.

The Fed downwardly revised its forecast for core consumer price growth in 2019 to 1.6 percent from 1.8 percent, although the inflation estimates for the next three years were unchanged.

Looking ahead, the Fed's first monetary policy meeting of 2020 is scheduled for January 28th and 29th, with rates widely expected to remain on hold.

CME Group's FedWatch Tool currently indicates a 91.4 percent chance that the Fed will leave rates unchanged at the January meeting.

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