Posted 2 months ago

Why Did the Fed Keep Interest Rates Unchanged?

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The Federal Reserve voted unanimously Wednesday during the March Federal Open Market Committee to leave interest rates unchanged in the 2.25% to 2.5% range. Apparently, policy makers aren’t in “any hurry to change” their interest rate policy, preferring to watch as the economy evolves, and there will be no raises in rates this year “unless conditions change significantly,” according to committee chairman Jeremy Powell.

A few months ago, in December, committee members projected two interest rate hikes in 2019; now, of the 11 Fed officials, six anticipate just one rate hike later in the year with the other five forecasting no change at all.

The committee said in a post-meeting statement that the country's labor market "remains strong," but economic activity has "slowed from its solid rate in the fourth quarter," citing sluggish spending by households and reduced business investment as contributing to the slowing economic growth and declining inflation, which were the primary reasons the Fed are leaving rates unchanged.