Federal Reserve Keeps Rates on Hold

The Federal Reserve kept the target range on its benchmark lending rate on hold Wednesday, and economic projections from policy makers signaled no change this year before a cut in 2020.

The target for the fed funds rate was held at 2.25% to 2.5%, the Federal Open Market Committee said after its two-day meeting. The probability of a hold stood at about 76% on the CME Group’s FedWatch tool ahead of the statement’s release, while projections of a 25 basis-point cut were 24%.

“The committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the committee’s symmetric 2% objective as the most likely outcomes, but uncertainties about this outlook have increased,” the FOMC said in its statement. “In determining the timing and size of future adjustments to the target range for the federal funds rate, the committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2% inflation objective.”

The FOMC will consider “measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments,” it said. St. Louis Fed President James Bullard was the lone dissenter, calling for a 25 basis-point rate cut.

The Fed has kept rates on hold for all of 2019 as growing global trade wars dented consumer and business sentiment, even after a better-than-expected growth pace in the first quarter of 3.1%. Rates were held near zero in the wake of the 2008 financial crisis before the Fed began incremental hikes in December 2015.

Policymakers are projecting a median fed funds rate of 2.4% for this year and 2.1% in 2020, compared with March’s outlook also for 2.4% this year and 2.6% for 2020. The change implies no moves in 2019 and a 25-point reduction in 2020.

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