Federal Reserve signals rates on hold for some time
SOUNDBITE (ENGLISH) FEDERAL RESERVE CHAIRMAN JEROME POWELL, SAYING:
"I think both the economy and monetary policy right now are in a good place."
Federal Reserve Chairman Jerome Powell sounded the all clear for the economy Wednesday after policymakers not only left interest rates where they were..
but strongly hinted there won't be any rate moves at all next year.
SOUNDBITE (ENGLISH) FEDERAL RESERVE CHAIRMAN JEROME POWELL, SAYING:
"We believe that the current stance of monetary policy will support sustained growth, a strong labor market and inflation near our symmetric two percent objective. As long as incoming information about the economy remains broadly consistent with this outlook the current stance of monetary policy likely will remain appropriate."
The Fed on Wednesday kept its key lending rate in a range of at 1-1/2 to 1.75 percent, which was widely expected after it slashed rates three times this year.
At the time, those cuts were described as necessary to guard the economy from risk of a dramatic slowdown caused by a bruising trade war between the U.S. and China, as well as Brexit uncertainty.
But since that time - unemployment has dropped to a near 50-year low, wages are steady, and consumer spending has been solid - all while inflation has remained subdued.
Trade, however, remains a wild card - but Powell is now more concerned with an inflation rate that persistently runs too cold. If that changes, then and only then will the Fed consider a rate hike.
SOUNDBITE (ENGLISH) FEDERAL RESERVE CHAIRMAN JEROME POWELL, SAYING:
"In order to move rates up, I would want to see inflation that's persistent and significant - a significant move up in inflation that is also persistent before raising rates to address inflation concerns - at least that's my view."
That means lower rates for longer.
Wall Street liked the thought of that - and snapped a two-day losing streak.
President Trump, however, may not be as pleased. He has launched an unprecedented campaign involving personal attacks and name calling against Powell and the Fed. Trump has pounded the table for rate cuts - and is not likely to remain quiet as the Fed now switches to stand-in-place mode for the foreseeable future.
