March 21, 2019
The Federal Reserve decided to hold interest rates steady on Wednesday and gave off indications that it may not raise them again this year. That turn-of-events by the money policymaking group hints it is growing more concerned about the economy.
The Federal Open Market Committee decided to maintain the target range for the federal funds rate at 2.25% to 2.5%. It had been on a course of “normalization” since 2015, raising rates nine times since then.
Fed Chair Jerome H. Powell said, “Growth is slowing somewhat more than expected. While the U.S. economy showed little evidence of a slowdown through the end of 2018, the limited data we have so far this year have been somewhat more mixed.”
The Fed still sees sustained economic activity, strong labor market conditions and inflation holding near its 2% objective. Yet, it noted, “In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.”
The central bank says recent indicators point to slower growth of household spending and business fixed investment in the first quarter. On a 12-month basis, overall inflation declined, largely as a result of lower energy prices; inflation for items other than food and energy remains near 2%.
The Fed also says it intends to slow the reduction of its $4 trillion asset portfolio by reducing the cap on monthly redemptions from the current level of $30 billion to $15 billion, beginning in May. It plans to conclude the reduction of its aggregate securities holdings in the System Open Market Account at the end of September.
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