US Fed pauses on interest rate hike
22 March 2019
The US Federal Reserve on Wednesday left its policy interest rates unchanged, following what it said a slowing of economic activity from a robust fourth quarter 2018.
At the end of a two-day policy meeting, the Federal Open markets Committee (FOMC) said the move was intended to meet market expectations and reflected the central bank's patient approach regarding monetary policy changes.
To support the goals of fostering maximum employment and price stability, the Federal Open Market Committee (FOMC) decided to maintain the target range for the federal funds rate at 2.25 per cent to 2.5 per cent, the central bank stated in a release.
Although growth of economic activity has slowed from its solid rate in the fourth quarter, the FOMC noted that payroll employment was little changed in February, but job gains have been solid, on average, in recent months, and the unemployment rate has remained low.
However, it said, recent indicators pointed to slower growth of household spending and business fixed investment in the first quarter.
“On a 12-month basis, overall inflation has declined, largely as a result of lower energy prices; inflation for items other than food and energy remains near 2 per cent. On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of longer-term inflation expectations are little changed.”
The Committee also decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 per cent.
FOMC expects sustained expansion of economic activity, strong labour market conditions, and inflation near the 2 per cent objective as the most likely outcomes.
In light of global economic and financial developments and muted inflation pressures, the committee said it would go slow on future adjustments to the target range for the federal funds rate and would take decisions at the appropriate time to support those outcomes.
This assessment will take into account a wide range of information, including measures of labour market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments, it added.