US Federal Reserve won't raise interest rates in 2019
The US central bank said that interest rates will remain unchanged.
Despite predictions from financial experts, the US Federal Reserve will leave interest rates unchanged. Minutes from the the latest meeting of the Federal Open Market Commission(FOMC) have also signaled that the Fed is unlikely to raise interest rates for the rest of 2019.
Why did the Fed leave rates unchanged?
The Fed took a dovish turn and left rates unchanged because the US central bank noted that it would exercise patience before changing interest rates. Since Wall Street became volatile after the last time the Fed raised interest rates, the bank is being more cautious before increasing rates.
The Fed is keeping rates steady between 2.25%-2.5% because the FOMC noted that the US economy has ‘slowed from its sold rate in the fourth quarter.’
The FOMC meeting attendees also voted to keep interest rates unchanged with expectations of a lowered gross domestic product (GDP) and slightly higher unemployment.
The Fed chair, Jerome Powell, said that the central bank will exercise patience until statistics in unemployment and inflation change.
‘Patient means that we see no need to rush to judgment. It may be some time before the outlook for jobs and inflation calls clearly for a change in policy,’ said Powell.
The Fed chair also noted that global concerns weighed on the central bank’s decision. Powell said that growth in the economies of China and Europe have lessened ‘substantially’, which has led to the bank leaving rates unchanged.
The Fed ends its winding down of balance sheet
In addition to the unchanged interest rates, Powell also noted that the central bank will wind down the reduction of its US Treasury securities holdings later this spring and conclude it completely in September. The decision to reduce the number of bonds held is positive news for financial experts who want the Fed to end a policy they see as restrictive during a time of economic unpredictability.
The Fed said in a statement that it is carrying out the normalization process to have a balance sheet that will 'likely still be somewhat above the level of reserves necessary to efficiently and effectively implement monetary policy.'
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Federal Reserve meeting
Find out how the Fed affects the markets ahead of the FOMC meeting taking place between 18 - 19 June 2019.
- How might the next Fed meeting affect traders?
- What was decided at the last Fed meeting?
- How does the FOMC announcement usually affect the dollar?
Live prices on most popular markets
- Forex
- Shares
- Indices
