REUTERS/Jonathan Ernst
- The Federal Reserve left borrowing costs unchanged at its last policy meeting of the year on Wednesday.
- Policymakers signaled that they saw little to no need to boost the economy further anytime soon.
- The pause is likely to draw ire from President Donald Trump, who has regularly pressured the policy-setting Federal Open Market Committee to cut rates.
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The Federal Reserve left borrowing costs unchanged at its last policy meeting of the year on Wednesday and signaled that policymakers saw no need to boost the economy further anytime soon.
The central bank predicted that current interest-rate levels could keep the record-long expansion humming for now, even against a backdrop of cooling global growth and ongoing trade disputes. Those strains had prompted policymakers to reverse course this summer and pursue stimulus measures for the first time since the financial crisis.
The pause is likely to draw ire from President Donald Trump, who has regularly pressured the policy-setting Federal Open Market Committee to take steps to juice the economy ahead of his reelection bid in 2020.
The FOMC lowered the benchmark interest rate three times this year, to a target range of 1.5% to 1.75%, which appeared to help stabilize an outlook that had become increasingly uncertain. The unemployment rate fell to its lowest level in half a century last month, and consumers have continued to spend at a robust pace.
“The US economy — with a little monetary policy support — is proving resilient,” said Josh Wright, the chief economist at iCIMS, a recruiting-software firm. “Hikes are out of the question right now, but it’s hard to make a case for further cuts. We have a number of months to see how trade negotiations go and how prior rate cuts filter through the economy.”
But growth is expected to continue to slow in the coming months, particularly as Trump escalates a tit-for-tat economic fight with China. The US is scheduled to hit the second-largest economy with more than $100 billion worth of additional tariffs on Sunday, effectively targeting all products imported from there.
The White House has separately threatened to increase duties on allies in the European Union and South America, leading to sharp slowdowns in manufacturing activity and business investment.
“We think the Fed has scope to ease if needed to support the US economy,” said Mark Haefele, the chief investment officer at UBS. “If tariffs hurt the consumer and the economy experiences a significant soft patch, we would expect the FOMC to cut the top of the Fed funds target range.”
Federal Reserve Chairman Jay Powell is scheduled to hold a press conference on the rate decision at 2:30 p.m. ET.
This story is developing. Please check back for updates.
