Federal Reserve holds interest rate, stresses “patience” on future hikes

The Fed’s decision comes amid a cooling housing market

Jan.January 30, 2019 03:00 PM

The Federal Reserve and Jerome Powell (Credit: Getty Images and Wikipedia)

The Federal Reserve has decided to hold interest rates steady, signaling a sharp departure from its recent policymaking.

The benchmark rate will stay between 2.25 and 2.5 percent, and the Fed said on Wednesday that it will be “patient” in making future rate decisions.

Some analysts take the Fed’s latest comments to mean that the body will not raise rates in March either. Instead, officials seem more likely to raise rates once or twice in 2019, rather than three times, as previously expected. The Fed has increased rates in five consecutive quarters and nine times since December 2015.

The Federal Open Market Committee said in a statement on Wednesday that “The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective.”

But the decision comes amid volatile financial markets and a cooling U.S. housing market. There are a number of indicators suggesting the economy is starting to slow down, particularly the housing market. December 2018 was the worst month for home sales since 2015, according to the National Association of Realtors. And sales of existing homes dropped 10.3 percent in December compared to the same time in 2017, according to a report from the organization.

President Trump, meanwhile, has been an outspoken critic of the Fed’s interest rate hikes. He has said the increases are hurting the stock market, which declined significantly at the end of 2018.

The Federal Reserve’s announcement was the first meeting after the government shutdown, which limited some of the economic data the government was able to get.

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