Fed Reserve holds rates steady amid weakening housing market

The Fed also indicated it would likely not raise rates this year

Mar.March 20, 2019 04:23 PM

Jerome Powell (Credit: Getty Images)

The Federal Reserve said it will hold rates steady and signaled it would likely not raise rates for the rest of the year amid worries over economic growth.

In a statement, the Fed stressed again that it will remain patient in making future rate changes. The decision marked a change from the past few years. The Fed increased rates four times in 2018 and and nine times overall since December 2015.

It said in its minutes that economic growth has slowed from the fourth quarter of 2018, citing weaker household spending and fixed business investment. Fed officials further indicated that it would only raise rates one time in 2020.

One indicator of this economic slow down has been the housing market. In January, existing home sales dropped to 4.95 million, the lowest number since November 2015, according to a recent report from the National Association of Realtors. Inventory, meanwhile, seems to keep rising. A new report by Re/Max showed that housing inventory rose 5.8 percent in February for the fifth consecutive month.

Now, 11 out of 17 Federal Reserve officials said they did not project rates to increase this year. This means that the Fed’s benchmark rate will likely stay between 2.25 and 2.5 percent for the rest of the year. In December, just two officials expected the Fed to hold rates steady in 2019.

Fed officials are now expecting the economy to cool down more than previous projections.

As a result, the Federal Reserve also announced that it would take a step back on its previous plans to downsize its huge portfolio of government-backed securities.

The Fed has a $4 trillion asset portfolio of securities that it purchased during the financial crisis in order to boost the economy. It’s been trying to reduce that portfolio for two years as the economy has improved by letting notes mature. It now said it will stop the runoff in September as the economy is slowing down.

Related Articles

2965 West Corporate Lakes Boulevard and Black Creek Group CEO Raj Dhanda (Credit: Google Maps, Blue Vault)

TIAA sells Weston warehouse for $33M

Madison Realty Capital'a Josh Zegen and Fort Partners' Nadim Ashi  

Four Seasons in Fort Lauderdale scores $210M loan

Daily Digest Miami

South Florida home sales struggle in October, Cipriani and Terra plan luxury condo

Rendering of Sailboat Bend II

Affordable housing project in downtown Fort Lauderdale lands $27M loan

Daily Digest Miami

Heir to Merck pharma fortune sells Palm Beach estate, Brookdale buys back Sawgrass Park portfolio for $80M: Daily digest

Daily Digest Miami

SoftBank to take control of WeWork, ULI recommends changes to city of Miami zoning code: Daily digest

Daily Digest Miami

Ben Carson talks Opportunity Zones, top developers riff on condos vs. rentals: Daily digest

From left: Amir Korangy and Secretary of Housing and Urban Development Dr. Ben Carson

Ben Carson on Opportunity Zones, unity and red and black ants: TRD Miami Showcase & Forum