The Federal Reserve left its key interest rate unchanged Wednesday and projected no rate hikes in 2019, dramatically underscoring its plan to be "patient" about any further increases. The Fed announced that it was keeping its benchmark rate—which can influence everything from mortgages to credit cards to home equity lines of credit—in a range of 2.25% to 2.5%. It also said it will stop shrinking its bond portfolio in September, a step that should help hold down long-term interest rates. Together, the moves signal no major increases in borrowing rates for consumers and businesses. Some analysts believe the next rate move could be a cut later this year if the economy slows as much as some fear it might, reports the AP.
In signaling no rate increases at all this year, the Fed's policymakers reduced their forecast from two that were previously predicted in December. They now project one rate hike in 2020 and none in 2021. The Fed's pause in credit tightening is a response, in part, to slowdowns in the US and global economies. It says that while the job market remains strong, "growth of economic activity has slowed from its solid rate in the fourth quarter." Fed officials expect economic growth of just 2.1% this year, down from its previous projection of 2.3% growth. The AP reports US stocks erased an early loss and turned higher in afternoon trading on the news. (More Federal Reserve stories.)
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