WASHINGTON — As expected, the Federal Reserve opted to take no action to change interest rates steady at the conclusion of the two-day meeting of the Federal Open Market Committee. But the Fed also used the meeting to indicate it doesn’t expect to take any action in 2020 as inflation remains low.
As a result, the FOMC has kept the funds rate in a target range of 1.5%-1.75%.
“The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2% objective,” the FOMC said in a statement. “The Committee will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures, as it assesses the appropriate path of the target range for the federal funds rate.”
Looking forward, MSNBC noted through the “dot plot” of individual members’ future projections, the FOMC is indicating little chance of a cut or increase in 2020. Just four of 17 members anticipating one quarter-point move up in 2020.
Looking to 2021
There also was a general downward shift for 2021, with the chart pointing to at least one and possibly two increases, MSNBC added.
The Fed is projecting 2019 will finish with a 2.2% gain in gross domestic product, followed in consecutive years by 2%, 1.9% and 1.8% gains, respectively.
“Members did reduce their inflation expectations this year,” MSNBC noted. “They now see the core personal consumption expenditures gauge to register just 1.6% growth this year, down from the 1.8% projection in September. They kept their estimates consistent at 1.9% in 2020 and 2% for the following two years.”