Landmark Skybox

Breeze-Courier | Taylorville, IL
The Weather Network
Advanced Search
search sponsored by


LOGIN | SUBSCRIBE




KMRM

home : news : national news free February 20, 2020

12/12/2019 1:13:00 PM
Federal Reserve leaves low rates alone

WASHINGTON (AP) — Chairman Jerome Powell made clear Wednesday that the Federal Reserve is prepared to keep its benchmark interest rate very low through at least next year — and possibly longer.

Fueling that expectation is the growing belief of Fed officials that inflation will remain tame even as the economy keeps growing modestly and the job market remains solid. The lowest unemployment rate in a half-century — 3.5% — won’t necessarily fan high inflation as it might have in the past, Powell suggested at a news conference.

On Wednesday, the Fed left its key short-term rate in a low range of 1.5% to 1.75% after having reduced it three times this year. Powell had previously characterized those rate cuts as “insurance” that would offset the drags from the U.S.-China trade war and global slowdown. But on Wednesday, he boldly suggested that the Fed wouldn’t likely reverse those cuts for the foreseeable future.

“Inflation is barely moving up, notwithstanding that unemployment is at 50 year lows and expected to remain there,” Powell said at his news conference. “We have learned that unemployment can remain at quite low levels for an extended period of time without unwanted upward pressure on inflation.”

In a further sign of its confidence, the Fed’s latest policy statement dropped a phrase it had previously used that referred to “uncertainties” surrounding the economic outlook. This change suggested that the Fed is now less worried about economic risks from the trade fights or global slowdown.

With the Fed’s key rate likely to stay where it is, consumers interested in buying a home or car should continue to enjoy low borrowing costs. Businesses will likely also enjoy lower interest rates. Savers, though, will struggle to earn a return above the inflation rate.

Powell signaled that persistently low inflation is allowing the Fed to pursue low interest rate, or “accommodative,” policies to sustain the 11-year economic expansion and try to create the conditions for more people to find jobs.

“Even though we are at 3 1/2% unemployment, there is actually more slack out there in a sense,” Powell said. “And the risks of using accommodative monetary policy, our tool, to explore that, are relatively low.”

The chairman expressed optimism about the economy and satisfaction that the Fed’s rate cuts this year may have helped prolong growth.

“Both the economy and monetary policy are in a good place,” he said.

Many analysts note, though, that the economy faces threats from the trade conflicts, a stumbling manufacturing sector and cutbacks in business investment. Some say the Fed may feel compelled to cut rates at least once next year.

Still, in updated forecasts the Fed issued Wednesday, no officials penciled in a rate cut in 2020. Instead, four Fed officials said they expected a rate increase next year. The remaining 13 officials projected no change to rates.





Article Comment Submission Form
Please feel free to submit your comments.

If you are looking for the SPEAK OUT submission form, you can find it by clicking here: Speak Out Form


Article comments are not posted immediately to the Web site. Each submission must be approved by the Web site editor, who may edit content for appropriateness. There may be a delay of 24-48 hours for any submission while the web site editor reviews and approves it.

NOTE: All information on this form is required. Your telephone number and email address will not be displayed or shared.
Submit an Article Comment
First Name:
Required
Last Name:
Required
Telephone:
Required
Email:
Required
Comment:
Required
Passcode:
Required
Anti-SPAM Passcode Click here to see a new mix of characters.
This is an anti-SPAM device. It is not case sensitive.
   










Trinity Dodge Fixed
Dr Paul The Dentist
NewsWebPagesOpinionPeopleObituariesAg & BusinessSportsContact UsLife
Subscriptions | Username & Password Reminder | Change Password | Life

Breeze-Courier & Printing | 212 S Main St. Taylorville, IL 62568 | (217) 824-2233 |
website@breezecourier.com

© Copyright 2014 Breeze-Courier & Printing. All Rights Reserved.
Original content may not be reprinted or distributed without the written permission of Breeze-Courier & Printing.

Software © 1998-2020 1up! Software, All Rights Reserved