Press "Enter" to skip to content

Fed Mulls to Hold Interest Rates Until At least 2021

The U.S. Fed Reserve Wednesday held interest rates steady. It indicated borrowing costs wouldn’t change anytime soon, with average economic growth and historically low unemployment expected to continue through the 2020 presidential election.

In its final policy meeting of a turbulent year, when it was driven to cut rates of interest thrice to avert a slowdown mainly fueled by President Donald Trump’s trade conflict, the U.S. central bank struck a notably confident tone, the actions it had taken thus far are working.

The policy decision left the Fed’s benchmark overnight lending rate in its current goal range between 1.50% and 1.75%, three-quarters of a percentage point under the place it began this year.

And after a dispute earlier over the direction of policy and disagreements at its last four rate-setting conferences, the Fed ended the year on the same page. The vote on its latest policy statement was unanimous, and the new financial projections confirmed 13 of 17 Fed policymakers anticipate no change in interest rates until at least 2021.

No policymakers suggested lower rates could be appropriate in the coming months.

Combined, it’s evidence of a central bank in which the most “dovish” members feel the current low-interest rates will permit job and wage gains to proceed, while the most “hawkish” feel inflation will stay contained – a soft landing for either side after a year in which recession risks grew, the U.S. bond yield curve inverted, and trade policy damaged markets.

While the decision not to cut rates of interest may irritate Trump, who has demanded even lower borrowing costs, the Fed’s underlying note that the U.S. economy is in a “good place” goes well with the Republican incumbent’s reelection.

Be First to Comment

Leave a Reply

Your email address will not be published. Required fields are marked *