Fed signals steady interest rates as economic risks lessen

Business News

WASHINGTON (AP) – The Federal Reserve believes that downside risks to the U.S. economy have lessened with the easing of trade tensions and better prospects for global growth but officials note a concern that possible spillovers from a deadly virus in China represent a new threat.

In its semi-annual monetary policy report, the Fed did not signal any imminent changes in its benchmark interest rate, which it cut three times last year to the current historically low range of 1.5% to 1.75%.

The Fed said after quarter-point rate cuts at the July, September and October meetings it has viewed the present level of interest rates to be “appropriate to support sustained expansion of economic activity” and a strong labor market and inflation rising to the Fed’s 2% target.

Federal Reserve Chairman Jerome Powell will testify before congressional committees on the new report on Tuesday and Wednesday, and his testimony is expected to amplify the Fed’s view that no further changes in interest rates are needed.

Many economists believe the Fed will keep rates unchanged for the entire year although some analysts think there is still the chance of one more rate cut if risks such as the coronavirus outbreak in China threatens to slow U.S. growth.

The report said the Fed “will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path” for interest rates.

Generally, the report provided an upbeat assessment of economic prospects, noting that downside risks to the U.S. economy had receded somewhat in the latter part of 2019 with the announcement of a Phase One trade agreement that allowed for a cease-fire in a trade war between the United States and China.

In addition, the Fed said a slowdown in global growth, which had dragged down U.S. manufacturing, appeared to be leveling off and financial market conditions had improved, led by a rebound in the stock market.

But the report cautioned, “The recent emergence of the coronavirus … could lead to disruptions in China that spill over to the rest of the global economy.”

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Cosmos

More Don't Miss

Trending now

Upcoming Events

Stay Connected