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The Fed: No Changes to Interest Rates

The Federal Reserve announced that it would not lower the benchmark rate any further than its current range of 1.5% to 1.75%, ending a string of cuts to interest rates. 

In its official announcement, the Fed stated, “the current stance of monetary policy is appropriate to support sustained expansion of economic activity.” 

The Fed’s decision to not slash interest rates comes just days after the U.S. Bureau of Labor Statistics revealed the U.S. economy added 266,000 jobs in November, with the unemployment rate holding steady at 3.5%. 

“It’s a significant surprise because economists were ready to go with the idea that payroll growth was slowing down because the job market had gotten tight,” said Stephen Stanley, Chief Economist at Amherst Pierpont in an interview with Bloomberg. “The whole tenor has changed in terms of job growth. We’re back at steady-as-she-goes at a robust pace.”

Projections from the Fed now indicate that the current interest rate environment is enough to sustain growth, as there are no plans to cut rates in 2020. The Fed most recently cut rates in October to its current standing of 1.5% to 1.75%—the third time in 2019 rates were cut. 

“Global central banks maintain accommodative stances in their monetary policies, focused on steering economies away from a recessionary precipice,” said George Ratiu, Senior Economist, realtor.com on Wednesday’s announcement. 

Ratiu said the most was anticipated by investors and that mortgage rates are expected to remain consistent in the months ahead. 

“Rates are over 100 basis points below last year, providing wind in the sails for homebuyers,” Ratiu said. “However, the sharp contraction in the number of homes available for sale across all price ranges has dampened the housing momentum." 

CNBC also reported that just four of the 17 members anticipated a one quarter-point increase in 2020. Projections past next year point to a return to increases, as forecasts call for the average interest rate in 2021 to be 1.9% and 2.1% in 2022.

About Author: Mike Albanese

Mike Albanese is a reporter for DS News and MReport. He is a University of Alabama graduate with a degree in journalism and a minor in communications. He has worked for publications—both print and online—covering numerous beats. A Connecticut native, Albanese currently resides in Lewisville.
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