Fed holds 2019 interest rates as economy slows

Fed holds 2019 interest rates as economy slows

- Balance sheet run-down also to end early due to global market impact.

The S&P 500 and the Dow ended lower on Wednesday as interest rate-sensitive financial stocks dragged down the indexes after the U.S. Federal Reserve affirmed a dovish monetary policy stance.

"Previously they had indicated two rate increases of 25 basis points each in 2019". More than half the committee's members signaled they don't expect any additional rate increases this year.

It said in its minutes that economic growth has slowed from the fourth quarter of 2018, citing weaker household spending and fixed business investment.

The Fed kept the federal funds rate unchanged at a rate of 2.25% to 2.5%. The faltering global economy, volatility in overseas financial markets and the reduced domestic inflation pressures explain, when combined together, Wednesday's policy message.

Ms Haque said as the cost of borrowing has not gone up, those anxious about further increases in interest rates this year "should feel some relief that is now less likely to happen".

Federal Reserve Chair Jerome Powell speaks during a news conference in Washington, Wednesday, March 20, 2019.

The Fed also said it would ease back on its sell-off of its bond holdings by lowering its monthly cap from $US30 billion to $US15 billion.

Bond yields moved lower in response to the Fed's announcement. That negative performance is owing largely to Brexit developments.

On Thursday, Central Bank of Bahrain cut its one-month deposit rate to 3.1 per cent from 3.25 per cent, according to a statement on its website. It now said it will stop the runoff in September as the economy is slowing down. The Fed increased rates four times in 2018 and and nine times overall since December 2015. "They are very exposed if wage gains continue to accelerate".

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Federal Reserve policymakers see a USA economy that is rapidly losing momentum.

Ultimately, the direction of the Dollar from here will be determined as much by what happens overseas in Europe and elsewhere as it will by what the Fed does.

US interest rates traders piled on bets the Fed would cut borrowing costs in early 2020, with the fed funds contract for January 2020 delivery implying traders are pricing in a 48 percent chance of a rate cut at the first Fed policy meeting of 2020.

General Mills turned in a good quarter and was up 4 per cent.

That was also the view of financial markets, with short-term interest-rate futures quickly pricing in a rate cut next year.

The Federal Reserve said it will not raise rates in 2019 because economic growth in North America has slowed down.

"It may be some time before the outlook for jobs and inflation calls clearly for a change in policy", Fed chairman Jerome Powell told delegates at a two-day policy meeting. Big bank stocks such as JPMorgan Chase and Bank of America - which had been rallying nicely into Fed Day - were clobbered.

Major U.S. indexes snapped higher across the board shortly after the Fed released its latest policy announcement at 2 p.m. The three-month and 10-year spread is the Fed's preferred measure of the Treasury yield curve as it shows the strongest historical correlation between curve inversion and forthcoming recession. It also raises the stakes over an evolving debate about the need for fiscal, social and other policies that may be targeted to pick up the slack. Get 3-5% more currency than your bank would offer by using the services of foreign exchange specialists at RationalFX.

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