Consumer Finance

Federal Reserve Leaves Interest Rates Unchanged

Following its most recent two-day meeting in Washington, D.C., this week, the Federal Open Market Committee (FMOC) decided to leave interest rates unchanged.

Citing improved sentiment in the weeks following Donald Trump’s election to the U.S. presidency, the FOMC said that the near-term outlook for the U.S. economy includes “some further strengthening” in employment levels and also a movement toward the target inflation rate of about 2 percent.

Expectations among Fed policy watchers include two to three rate hikes this year, which would dovetail with the three rate hikes pondered by the FOMC, according to Bloomberg. A number of factors would help determine the number and timing of rate boosts. Among those determinants: the lifting of regulations and the imposition of tax cuts in a new Republican administration.

The most recent decision by the Fed to stand pat comes as members said that the unemployment rate has “stayed near its recent low,” which the newswire said represents language changed from last month, when the statement indicated that such rates “had declined.” On a different tack, consumer spending has been “rising moderately.” The vote to leave rates unchanged in a band spanning 0.5 to 0.75 percent was unanimous.

As has been reported, the GDP for the U.S. grew at a 1.9 percent annualized rate, down from about 4.5 percent in the third quarter. Unemployment remains at about a 4.7 percent level. Employers have averaged an addition of 200,000 jobs monthly since the middle of last year.


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