Fed Reserve holds rates steady amid weakening housing market

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

National /
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

arrow_forward_ios
The current Miami Beach North Shore library with Mayor Dan Gelber (Google Maps, Gelber)
Miami Beach seeks buyers for city-owned development sites
Miami Beach seeks buyers for city-owned development sites
Developer David Edelstein and Robert Levine of RAL Development with the project (Getty, RAL)
David Edelstein, partner close on missing piece of Wynwood assemblage for office towers
David Edelstein, partner close on missing piece of Wynwood assemblage for office towers
David Grutman and Pharrell’s Goodtime Hotel had received nearly 30 noise violations (Carma Connected, Getty)
Too much of a good time? David Grutman and Pharrell’s Goodtime Hotel could lose entertainment permit
Too much of a good time? David Grutman and Pharrell’s Goodtime Hotel could lose entertainment permit
Related Companies Chairman Stephen Ross with One Flagler (Related, Getty)
Prayers answered? Related Companies closes on church site for planned office tower in downtown West Palm
Prayers answered? Related Companies closes on church site for planned office tower in downtown West Palm
Grover Corlew principal Mark Corlew with Bank of America Tower in Boca Raton (Grover Corlew)
Grover Corlew buys Bank of America Tower in Boca Raton for $45M
Grover Corlew buys Bank of America Tower in Boca Raton for $45M
The partially collapsed 12-story Champlain Towers South condo building (Getty)
Inside the tug-of-war over the Surfside condo site’s future
Inside the tug-of-war over the Surfside condo site’s future
Moishe Mana and the downtown parking lot he purchased (Google Maps, Getty)
Moishe Mana expands downtown Miami assemblage with $12M purchase
Moishe Mana expands downtown Miami assemblage with $12M purchase
(Photos courtesy of Miami Historic Preservation, Smith Aerials, Colliers)
Development site near MiamiCentral hits the market
Development site near MiamiCentral hits the market
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...