A more dovish Federal Reserve kept rates steady (2.25% to 2.50%) today while also reducing their projected interest-rate increases going forward. In another somewhat surprising announcement, they indicated they would end the drawdown of the central bank’s bond holdings in September.
This new projection (of zero hikes for the rest of 2019) from Fed officials compared with two hikes in the December forecasts, which many blamed as the cause of December selloff in equities.
A comparison of current minutes vs. January’s meeting minutes can be found at the Wall Street Journal. In its statement, they repeated January language that it will be “patient” amid “global economic and financial developments and muted inflation pressures.”
In a subsequent press press conference, Jerome Powell touched on a wide array of mixed economic indicators. A big focus has been on the strong labor market which still has room to improve (i.e., slack) while inflation remains a non-issue. Global events such as trade, slowing global growth and BREXIT were also mentioned as specific issues that could be potential risks. The overall tone was that financial risks are not particularly high, hence we are in “a good place right now to be patient” and be data-dependent.
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