After talks at the May 1-2 Federal Open Market Committee meeting, it appears that Federal Reserve officials remain firm in their decision to move forward and be “patient” in their stance on saying that rates will likely remain unchanged moving forward into the future.
According to CNBC, “Despite their general optimism, the committee held the line on interest rates, primarily citing a lack of inflation pressures that allow the central bank to watch how events unfold before making any further moves.”
It’s important to note that these conclusions were arrived at days before President Donald Trump intensified the trade war between China—later resulting in the White House raising tariff’s on May 10 as well as China’s retaliation a few days following.
Earlier this year, the Fed indicated two potential rate hikes were likely this year. Since this announcement, the Fed has transitioned to their new forecast that suggests no moves in either direction.
“Officials also said they expect the first-quarter slowdown in housing spending to be “temporary” as consumer confidence recently has taken a solid uptick.
The Fed is holding its benchmark overnight funds rate in a target range of 2.25% to 2.5%. The rate had ticked to the upper end of the range prior to the meeting. That in turn prompted the committee to lower the interest it pays on bank reserves, used as a guidepost for the fund’s rate, to 2.35%. Since then, the fund’s rate has ticked lower but still remains near the upper end of the range.“