The Fed kept interest rates unchanged on Wednesday, following three decreases in a row. The central bank also indicated it does not expect any policy changes through at least 2020.
Traders also kept an eye on the trade front as there continues to be no clear indication that the U.S. and China will reach an agreement over trade that could stop or reduce the current level of tariffs. The U.S. is due to impose fresh duties on Chinese goods by Sunday. As per reports, the U.S. plans to delay these additional tariffs on Beijing as both sides try to work out an agreement. However, also on Tuesday, White House economic advisor Larry Kudlow said the Dec. 15 deadline is still on the table.
ECONOMIC NEWS: Fed FOMC Leave Interest Rates Unchanged-- The Federal Reserve on Wednesday announced its widely expected decision to leave rates unchanged, after three consecutive interest rate cuts. The Fed said its Federal Open Market Committee decided to maintain the target range for the federal funds rate at 1-1/2 to 1-3/4% on the heels of three straight quarter-point reductions. The vote to leave interest rates was unanimous, as Kansas City Fed President Esther George and Boston Fed President Eric Rosengren joined in after voting against the past three rate cuts.
The FOMC judged that the current stance of monetary policy is appropriate to support a sustained economic expansion, strong labor market conditions, and inflation near its symmetric 2% objective. The central bank maintained its assessment of the economy, reiterating that recent data indicates the labor market remains strong and that economic activity has been rising at a moderate rate. The Fed also once again noted that while household spending has been rising at a strong pace, business fixed investment and exports remain weak. The FOMC noted it 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 for rates.
Economic projections provided by the Fed along with the decision show a majority of FOMC participants expect interest rates to remain unchanged throughout 2020. The projections for GDP growth in 2019 and the coming years were unchanged from September, while the unemployment rate is expected to come in slightly lower than previously forecast. The Fed downwardly revised its forecast for core consumer price growth in 2019 to 1.6% from 1.8%, although the inflation estimates for the next three years were unchanged. Further, Fed Chairman Jerome Powell suggested he would not consider raising rates until inflation picks up significantly.
US Consumer Prices Rise 0.3% In November-- US consumer price index rose by 0.3% in November after climbing by 0.4% in October, a report released by the Labor Department on Wednesday showed. The bigger than expected increase in consumer prices partly reflected continued growth in energy prices, which climbed by 0.8% in November after spiking by 2.7% in October. Gasoline prices jumped by 1.1%. Excluding food and energy prices, core consumer prices crept up by 0.2% in November.
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