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FOMC maintains current federal funds rate in first meeting of 2019

FOMC maintains current federal funds rate in first meeting of 2019

The Federal Open Market Committee held their first meeting of the new year, voting to keep the target range for the federal funds rate at 2.25-2.5 percent.

This marked the first of eight FOMC meetings scheduled for 2019, as well as the first such gathering since December 2018, when the committee's ten members voted on a quarter-point rate increase. At that time, the FOMC had two more rate hikes penciled in for 2019, but many are now doubting those will come to fruition, as the central bank struck a very different tone in its most recent statement.

"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 to support these outcomes," the press release read.

Language that appeared in the FOMC's December statement and hinted at the likelihood of "further gradual increases" to the rate disappeared from the new statement. While still striking a cautious tone, the central bank also noted strong job gains and low unemployment occurring over the past month, as well as overall inflation and inflation for items other than food and energy remaining near 2 percent.

President Donald Trump has criticized previous rate hikes, which has led some to speculate that the FOMC's apparent change of direction represents a capitulation to the White House. When Federal Reserve Chairman Jerome Powell dined with the president on Feb. 4, just days after the FOMC meeting, economists expressed concern regarding Fed independence, reports Market Watch.

Interest rates likely to stabilize

The fed funds rate is one of the most important interest rates in the American economy and has a direct impact on monetary and financial conditions. The rate also indirectly influences short term interest rates, as lenders tend to base their own rates on the prime lending rate.

If experts are correct in their predictions that the fed is unlikely to raise rates at all in 2019, that could be good news for borrowers, who have recently had to contend with rising interest rates. Fixed-rate loan holders will remain unaffected regardless, but many variable rate loans, such as credit card debts and personal loans, are affected by the federal funds rate. Those worried about interest rate increases on their variable rate loans should be encouraged by the news that the Fed appears poised not to increase the rate in the near future.

2019 could prove a good year to take out a loan

Those who have considered taking out or refinancing a mortgage, auto loan or another type of personal debt, may be similarly heartened by this news.

With rates set to remain steady until at least the next FOMC meeting on March 19-20, now may be the best time to take advantage of currently available rates, which could remain relatively static over the course of 2019. If you would like to get the loan process started, contact the Federal Savings Bank today.