CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

US Federal Reserve won't raise interest rates

The Fed will leave rates unchanged after its first meeting in 2019.

The US Federal Reserve has decided to leave interest rates unchanged at 2.25-2.5%. The decision echoes predictions about the Fed's decision on interest rates in 2019. The Fed chair, Jerome Powell, said that the US Central bank will be 'patient' before implementing more interest rate increases. The Dow Jones soared after the news.

Why didn't the Fed raise interest rates?

The Federal Reserve chose to leave interest rates unchanged because of the current global economic situation. After the Federal Open Market Committee (FOMC) meeting, the Fed decided that it will monitor the markets before implementing rate hikes.

'In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes,' said the FOMC in a statement.

While it was expected that the Fed would raise rates in 2019, Powell noted that he didn't see a need for raising interest rates because of a strong US economy.

'The case for raising rates has weakened somewhat,' said Powell.

Powell also stressed that the US central bank will change the balance sheet when necessary.

He noted that the Federal Reserve 'intends to continue to implement monetary policy in a regime in which an ample supply of reserves ensures that control over the level of the federal funds rate and other short-term interest rates is exercised primarily through the setting of the Federal Reserve’s administered rates, and in which active management of the supply of reserves is not required'.

Did Trump and the markets affect Fed decision?

US President, Donald Trump, has been highly critical of the Fed's decision to raise rates in 2018. The Dow Jones plummeted as a result, and Powell later said he would watch the markets before implementing rate changes. Powell denies that Trump influenced his decision.

'What we care about, and really the only thing we care about at the Fed, is doing our job for the American people and using our tools. We're always going to do what we think is the right thing, we're never going to take political considerations into account or discuss them as part of our work. We're human, we make mistakes, but we're not going to make mistakes of character or integrity. I wouldn't want the public to know that and I wouldn't want them to see that in our actions', said Powell.

Will the Fed remain dovish?

This latest decision by the Fed to leave rates unchanged could signal a dovish approach to interest rates in the new year. Investors will continue to watch to see what actions the Fed takes next and how it affects the markets.

This information has been prepared by IG, a trading name of IG 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.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

See an opportunity to trade?

Go long or short on more than 17,000 markets with IG.

Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.