Fed de­ci­sion keeps low in­ter­est rates un­changed

Orlando Sentinel - - BUSINESS - By Christo­pher Ru­gaber

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.”

RICHARD DREW/AP

A tele­vi­sion on the floor of the New York Stock Ex­change shows the Fed­eral Re­serve rate de­ci­sion Wed­nes­day.

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