Federal Reserve Declines to Raise Rates
January 29, 2020
The Federal Reserve has decided not to start the year with a rate hike.
The central bank’s policymaking Federal Open Market Committee voted unanimously to maintain the target range for the federal funds rate at 1.5 percent to 1.75 percent. In a statement, the Fed said it “judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation returning to the Committee's symmetric two percent objective.”
President Trump did not make an immediate comment on the Fed’s decision. However, he took to Twitter yesterday to remind the central bank – and, for that matter, the rest of the world–that he is not supportive of their decision-making.
“The Fed should get smart & lower the Rate to make our interest competitive with other Countries which pay much lower even though we are, by far, the high standard,” he tweeted. “We would then focus on paying off & refinancing debt! There is almost no inflation-this is the time (2 years late)!”
The last time the Fed cut rates was Oct. 30, 2019.
Mike Fratantoni, SVP and chief economist for the Mortgage Bankers Association (MBA), said: “The job market remains strong, with the unemployment rate at a 50-year low, and inflation remains near the Federal Reserve’s target. As a result, the market anticipates that the Fed is unlikely to move rates this year, and today’s communication is consistent with this expectation. We continue to expect that the Fed’s next move will be a rate increase at some point in 2021. In recent months, the Fed has been successful in providing sufficient liquidity to the market through Treasury bill purchases, and there was no spike in rates at year’s end – as some had feared. The Fed’s plans with respect to further growth of the balance sheet, and ongoing support for market liquidity, continue to evolve.”
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