WASHINGTON – The United States Federal Reserve left on Wednesday its benchmark interest rate unchanged despite President Donald Trump’s repeated calls for monetary easing, although it hinted that a rate cut could be on the horizon if the economic outlook worsens.
The Federal Open Market Committee, the central bank’s monetary policy-making body, voted 9-1 to hold the federal-funds rate at a target range of 2.25 percent and 2.5 percent after its latest two-day meeting, the first non-unanimous vote since Chairman Jerome Powell’s tenure began in February 2018.
“The Committee continues to view sustained expansion of economic activity, strong labor market conditions and inflation near the Committee’s symmetric 2 percent objective as the most likely outcomes, but uncertainties about this outlook have increased,” the FOMC said in a statement.
“In light of these uncertainties and muted inflation pressures, the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate.”
The two-day FOMC meeting came amid increased pressure on the central bank by Trump, who has repeatedly urged the Fed to spur US economic growth by lowering interest rates.
Powell, who was among those voting to hold rates steady, said in remarks at a news conference Wednesday that the US economy has performed “reasonably well” in 2019, although he also said the central bank was now more concerned about “cross-currents” than it was at the previous meeting of its monetary policy-making body.
“At the time of our last FOMC meeting, which ended on May 1, there was tentative evidence that these cross-currents were moderating. The latest data from China and Europe were encouraging, and there were reports of progress in trade negotiations with China. Our continued patient stance seemed appropriate, and the committee saw no strong case for adjusting our policy rate” the Fed chairman said.
But “in the weeks since our last meeting, the cross-currents have re-emerged. Growth indicators from around the world have disappointed on net, raising concerns about the strength of the global economy. Apparent progress on trade turned to greater uncertainty.”
“Many FOMC participants now see that the case for somewhat more accommodative policy has strengthened,” Powell said.
Also Wednesday, the Fed released its latest economic projections, forecasting that the US economy would grow 2.1 percent this year and 2 percent in 2020. In March, the central bank predicted economic growth of 2.1 percent in 2019 and 1.9 percent next year.
The Fed, meanwhile, now is forecasting inflation rates of 1.5 percent for this year and 1.9 percent next year, compared with 1.8 percent and 2 percent, respectively, in its March projection.
Those forecast levels are below the Fed’s 2 percent inflation objective.