Weekly Market Update

FED HOLDS RATES STEADY AND ADOPTS "PATIENT" STANCE

Thursday, January 31, 2019

On Wednesday, the Federal Reserve indicated its intent to hold interest rates between 2.25% and 2.5% and signaled that it may not raise them anytime soon, contradicting earlier indications of continued rising rates in 2019. Federal Reserve Chairman Jerome Powell said the case for higher interest rates has weakened in response to muted inflation and somewhat slower U.S. growth, stressing that the central bank will exercise patience before determining its next move. The Fed also announced that it would slow or potentially reverse the drawdown of its bond portfolio, a shift from its December commitment to winnow Treasuries and mortgage bonds. Some Fed officials think that the new approach may improve its ability to influence economic conditions. Prior to the 2007–2008 financial crisis, the Fed's actions focused primarily on adjusting the fed funds rate and the banking system's overall reserves.

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