Fed decision keeps low interest rates unchanged
WASHINGTON — The Federal Reserve left its benchmark interest rate alone Wednesday and signaled that it expects to keep low rates unchanged through next year.
The Fed’s decision follows three rate cuts earlier this year. It reflects its view that the U.S. economy has so far withstood the U.S.-China trade war and a global slump and remains generally healthy. Its benchmark rate, which influences many consumer and business loans, will remain 1.5% to 1.75%
In a sign of the Fed’s confidence about the economy, its latest policy statement dropped a phrase it had previously used that referred to “uncertainties” surrounding the economic outlook. That suggests that the Fed may be less worried about the effect of the U.S.-China trade war or overseas developments.
For now, the Fed appears inclined to leave rates alone through 2020. But many analysts note that the economy faces risks from the trade conflicts, a global slowdown and Brexit and say the Fed may feel compelled to cut rates at least once next year.
Persistently low inflation with low unemployment has led many Fed officials to conclude rates can remain lower for much longer than they thought without spurring higher prices.
In updated forecasts that the Fed issued, no officials penciled in a rate cut in 2020. Instead, four
Fed officials said they expected a rate increase next year. The remaining 13 officials projected no change to rates.
Speaking at a news conference afterward, Chairman Jerome Powell made clear that he thinks higher rates are unlikely anytime soon. “In order to move rates up,” he said, “I would want to see inflation that is persistent, that is significant, before raising rates to address inflation concerns. That is my view.”
A television on the floor of the New York Stock Exchange shows the Federal Reserve rate decision Wednesday.