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Fed keeps interest rates stable as Trump taps Powell

Fed keeps interest rates stable as Trump taps Powell

As expected, the Fed did not increase rates at its next-to-last meeting of 2017. The Federal Open Market Committee maintained the federal funds rate at a range of 1-1.25 percent, though the committee did comment on the rising economic activity and strengthening job market seen since the previous Federal Reserve meeting in September. This news strengthens many investors' predictions of a final 2017 rate hike following the December Federal Reserve meeting.

The Fed confirmed its plan to roll back its balance sheet is on track, having begun last month.

Trump taps Powell to lead Fed

This type of information is standard for the concluding day of any FOMC meeting, but the biggest question on many investors minds was who would lead the Fed after Chair Janet Yellen's first four-year term concludes in February.

At the time of the Fed's last meeting, President Donald Trump had conducted interviews with five people, including Yellen, Fed Governor Jerome Powell and Stanford economist John Taylor, The New York Times reported. Trump indicated his nomination of Powell on Thursday. Prior to the announcement, the president had offered no indication as to which way he was leaning. He had, however, stated in an Instagram video that he "[had] someone very specific in mind" and that he believed "everyone will be very impressed."

Many observers had concluded that Trump had narrowed his options to Taylor or Powell. What made that list of finalists interesting is the fact that these men seem to have opposite views on monetary policy, with Powell historically agreeing with most Federal Reserve decisions and Taylor typically voicing concerns against them.

The Times pointed out that this was the first time a president even acknowledged the presence of more than one Fed chair choice, and that Trump is also unique in having kept the country in suspense by publicly discussing the options. Historically, most Fed chairs are nominated for at least a second term. While Trump strayed from this trend by nominating Powell instead of staying with Yellen, his choice is an indication that the Fed will continue with similar monetary policies, Reuters noted.

"If we are to sustain all this progress, our economy requires sound monetary policy and prudent oversight," Trump stated, according to Reuters, as Powell watched. "We need strong and steady leadership at the U.S. Federal Reserve ... He will provide exactly that."

For information about what mortgage interest rates you may qualify for, reach out to The Federal Savings Bank.