Fed Says No Interest Rate Hikes This Year

March 20, 2019

The Federal Reserve announced today that they would keep its benchmark rate steady, and said that there would likely be no more hikes in the coming year. This is a dramatic turnaround in policy for the central bank, which had, as recently as December, predicted two rate increases in 2019.  After raising the rate four times last year, the Fed’s benchmark rates fund is holding steady in the 2.25 percent to 2.5 percent range. This rate helps determine the interest for most adjustable-rate consumer credit.

The decision comes along with lowered expectations for inflation and GDP growth in the coming year. This is a stark departure from the Fed’s recent intentions to normalize its fiscal policy after the financial crisis. In an effort to spur economic growth, the Fed held its benchmark rate at near zero for much of the last decade, and only recently began the process of returning the rate to its pre-financial crisis level. The major concern now is that, in the case of a dramatic economic downturn, the Fed is left with little wiggle room to lower rates and stimulate growth.

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