Federal Reserve votes to keep interest rates unchanged

The US central bank will keep rates steady amid a strong economy.

Federal Reserve building after Fed won't raise interest rates Source: Bloomberg

The US Federal Reserve voted to keep interest rates unchanged after the latest Federal Open Market Commission(FOMC) meeting. The interest rates will remain between 2.25-2.5%. The decision was expected as financial experts predicted the Fed would take a dovish approach to interest rates.

Why didn't the Fed raise interest rates?

The Fed noted that the lack of inflation pressure contributed to unchanged rates.

‘On a 12-month basis, overall inflation and inflation for items other than food and energy have declined and are running below 2 percent,’ noted the FOMC.

Inflation remains low at 1.6% in March. That falls below the US central bank’s preferred rate of 2%.

While inflation is weak, the US economy is still strong. The latest US GDP numbers show that consumer confidence is still robust. That growth could also have influenced the Fed’s decision not to raise interest rates.

Powell comments about Fed decision

Fed chair, Jerome Powell, noted that the US central bank wasn’t pressured to change interest rates in the foreseeable future.

‘We do think our policy stance is appropriate right now. We don’t see a strong case for moving in either direction,’ said Powell.

Could Trump affect Fed’s next decision?

The Fed’s future meetings could be impacted by the decisions of US President, Donald Trump. Trump has been tweeting during the FOMC meeting.

‘Yes, we are doing very well at 3.2% GDP (growth in the first quarter), but with our wonderfully low inflation, we could be setting major records,’ tweeted Trump.

Trump has long criticised Powell and wants to add members to the Federal Reserve Board that could challenge Powell and further lower interest rates. One choice, Herman Cain, withdrew his name from consideration.

Another candidate, Stephen Moore, supports Trump’s economic policies, but faces some opposition for his past controversial comments about women. Regardless of who is eventually chosen for the board, the Fed has for now decided to remain patient about interest rates because of the still strong US economy.


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Federal Reserve meeting

Find out how the Fed affects the markets ahead of the FOMC meeting taking place between 29 - 30 October 2019.

  • How might the next Fed meeting affect traders?
  • What was decided at the last Fed meeting?
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