Fed Keeps Its Key Interest Rate at 2.25-2.5%
NEW YORK – March 21, 2019
The Fed held its benchmark interest rate steady, and a majority of officials signaled they might not raise the rate at all this year.
The US Federal Reserve, which acts as the country's central bank, has kept its base interest rate at its current level of 2.25-2.5%.
“We don’t see data coming in that suggest that we should move in either direction. They suggest that we should remain patient and let the situation clarify itself over time,” Federal Reserve Chairman Jerome Powell said at a press conference Wednesday after officials slashed their projected interest-rate increases this year to zero from two. “It may be some time before the outlook for jobs and inflation calls clearly for a change in policy.”
At the same time, the US regulator expects one rate increase in the current year, although in the December forecast the Fed predicted two rate increases in 2019.
It was expected that the rate will be maintained at 2.25-2.5%. In particular, the futures on the interest rate showed that the probability of maintaining the indicator at the same level was 99.2%, while the probability of raising the rate to 2.5-2.75% was only 0.8%. In addition, all 94 experts surveyed by Bloomberg expected the interest rate to be maintained.
Also, the Fed has published an updated forecast for the main macroeconomic indicators. Thus, the regulator lowered the forecast for US GDP growth in 2019 to 2.1% from 2.3% determined at the December meeting; for 2020 it was lowered to 1.9% from 2%, and it remained unchanged at 1.8% for 2021.
The forecast for core inflation in the US in 2019 was revised down to 1.8% against the previously estimated 1.9%, and for 2020 and 2021 to 2% against 2.1%.
The US unemployment rate, according to the Fed, will rise to 3.7% compared with 3.5% in the December forecast, in 2020 - to 3.8% against 3.6%, in 2021 - up to 3.9% against 3.8%.
At the end of 2016, the Fed raised the key interest rate from 0.25-0.5% to 0.5-0.75% -- the second increase since 2008. This decision was due to the improved forecasts of the regulator on the level of unemployment, inflation, andon US GDP growth in 2016.
Throughout 2017, the Fed raised the rate three times, which reached 1-1.25% by the end of the year.
In 2018, the regulator raised the rate four times:
March 21 - up to 1.5-1.75%,
June 13 - up to 1.75-2%,
September 26 - up to 2-2.25%
December 19 - up to 2.25-2.5%.