Business

Federal Reserve bank holds on interest rates

'The Fed will be patient'

Reuters

Federal Reserve Board Chairman Jerome Powell speaks at his news conference Wednesday following the closed two-day Federal Open Market Committee meeting in Washington, D.C.
Reuters Federal Reserve Board Chairman Jerome Powell speaks at his news conference Wednesday following the closed two-day Federal Open Market Committee meeting in Washington, D.C.

WASHINGTON — The Federal Reserve left interest rates unchanged on Wednesday, defying a push from President Donald Trump for lower rates intended to stimulate the economy.

The U.S. economy is “solid,” the central bank said in a statement, suggesting it was in no rush to move interest rates, which are at just under 2.5 percent.

“The (Fed) will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes,” the Fed wrote in a statement released at the conclusion of their two-day policy meeting.

The next meeting is scheduled for June 18 and 19.

Fed leaders repeatedly have said they will be “patient” on any rate hikes, and they are not forecasting any increases or decreases this year.

Trump tweeted Tuesday that the economy would “go up like a rocket if we did some lowering of rates, like one point, and some quantitative easing.”

The actions Trump wants from the Fed typically are used only in periods of severe economic and financial stress, which there is little evidence of now.

Quantitative easing, or QE, was a bond-buying program the Fed employed in the aftermath of the financial crisis to pump money into the financial system and keep interest rates low.

The Fed announced it would cease QE in 2014.

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The Fed’s main concern at the moment is that inflation — a measure of how much the cost of living is rising — might be too low.

The central bank’s statement included strongly worded language about inflation running below the Fed’s 2 percent target.

“Overall inflation and inflation for items other than food and energy have declined and are running below 2 percent,” the Fed wrote.

“On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of longer-term inflation expectations are little changed.”

The central bank’s preferred inflation measure is sitting at 1.6 percent.

Most Americans don’t mind that prices on many goods aren’t rising much, leaving the Fed to mull whether it needs to adjust its target or take action to spur inflation.

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