Fed leaves key rate unchanged
With a new Federal Reserve leader about to be announced, the Fed is keeping its key interest rate unchanged. But it is hinting that it’s preparing to resume raising rates as the economy shakes off the effects of recent hurricanes.
In a statement after its latest policy meeting ended Wednesday, the Fed left its benchmark rate in a low range of 1 percent to 1.25 percent. With the economy on solid footing, the Fed is expected to raise rates for the third time this year when it next meets in December.
Overall, the Fed’s statement suggested a bright economic outlook, with steady if unspectacular growth and a healthy job market. It noted that a loss of U.S. jobs in September was directly related to disruptions from Hurricanes Harvey and Irma. Economists have projected that on Friday the government will report a job gain of 310,000 for October – a dramatic rebound.
It addition, the Fed said that a rise in gasoline prices after the hurricanes would likely prove temporary and that overall price increases remain generally soft. It reiterated its expectation that prices will resume picking up toward its 2 percent inflation target.
The central bank remains confident, the statement said, that the strength of the job market and the overall economy will justify further gradual increases in interest rates.
“The uncertainty about the economic impact of hurricanes has subsided, and the Fed noted the strengthening economy by saying it is expanding at a ‘solid rate,’ said Greg McBride, chief financial analyst at Bankrate. “If that’s not a prerequisite for an interest rate hike next month, I don’t know what is.”
President Donald Trump has said he will announce today his choice to lead the Fed beginning in February. Jerome Powell, a Fed board member, is assumed to be the top contender.
“I think you will be extremely impressed by this person,” Trump said Wednesday.