The Federal Reserve does not expect to raise the benchmark lending rate again this year, according to a closely-watched forecast released Wednesday, a surprising sign the US economy is slowing.
It was an aggressive downshift that likely will come as a shock to many economists who did not look for such a drastic change in outlook from the central bankers, who as recently as September expected to raise rates three times in 2019.
The shift meant nine of the 17 members of the policy-setting Federal Open Market Committee lowered their projection for this year.
But the forecast also confirms the next move is still expected to be an increase in the key policy interest rate, though that is not now expected to come until sometime in 2020.
The explanation can be found in the stark change in language in the statement from FOMC, which voted unanimously to keep the key rate unchanged at 2.25 to 2.5 percent, and which reflects the slowdown world's largest economy.
In its second meeting of the year, the committee said "growth of economic activity has slowed from its solid rate in the fourth quarter," as household and business spending is expected to drop off and annual inflation has declined.
In contrast, in January, the FOMC said economic activity was growing at a "strong rate" and household spending continued to "grow strongly." "In light of global economic and financial developments and muted inflation pressures, the committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate."
Fed Chairman Jerome Powell will face the news media at 1830 GMT and may shed more light on the about-face.
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