powell fed interest rates fomcAP Photo/Susan Walsh, File

  • The Federal Reserve left interest rates unchanged as was widely expected on Wednesday.
  • With forecasts for slower growth this year, focus was on signals for future policy moves.
  • Some expect the central bank’s next policy move could be a rate cut. 

The Federal Reserve left interest rates unchanged as was widely expected on Wednesday and signaled that it could be awhile before another increase.

The Red Tea Detox

The 12-member Federal Open Market Committee last voted to increase its benchmark interest rate by a quarter percentage point, bringing it to a target range of between 2.25% and 2.5% at the end of 2018.

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Officials have since then signaled they would take a more cautious stance toward monetary policy, citing recent stock-market turbulence, ongoing trade tensions, and dimmer expectations for global growth. At the last FOMC meeting in January, they dropped a reference to “further gradual increases.”

“With the deceleration in global economic growth in the second half of 2018 and its associated downward pressure on relative import prices in the US, the need for further monetary policy tightening diminished,” said Kevin Logan, chief US economist at HSBC.

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Still, some see a possibility for at least one of the two rate increases that had previously been penciled in for the year. There have been signs of upward pressure on US wages, with average hourly earnings jumping in February by their most in a decade.

The Fed also offered details on plans to hold a larger balance sheet than previously expected, saying it expects to end its runoff process in late September. In 2017, the central bank began reducing the $4 trillion portfolio of US Treasury debt and other assets it acquired following the financial crisis.

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“It’s even more telling that they’re beginning to pull this additional lever as well, which establishes a decidedly accommodative stance for the Fed,” said Mike Loewengart, chief investment strategist at Etrade.

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