Fed holds rates steady | Powell ‘fully intends’ to keep his job

WED, JUN 19, 2019

EVENING BRIEF

AS OF WED, JUN 19, 2019 • 04:08 ET

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EDITOR'S NOTE

The Federal Reserve held the line on interest rates Wednesday. While the Fed didn't formally say a rate cut was coming in 2019, traders held onto hope of policy loosening.

The decision to hold rates was 9-1. But a dot plot chart of members' expectations for rates showed division about where rates go through the rest of this year. The median "dot" indicated no change in rates this year, but the full chart showed eight members in favor of staying put, eight expecting to cut and one projecting a quarter-point increase, CNBC's Jeff Cox reports. Federal Reserve Chairman Jerome Powell said even those members who favored the status quo "agree the conditions for accommodation have strengthened since our May meeting."

Powell said policymakers are concerned about some of the recent economic developments and see a growing case for easier policy and that the discussion "focused on the appropriate response to the uncertain environment." The Fed is watching slowing global growth, persistently low inflation that falls short of the Fed's 2% target, and the effect of tariffs by the U.S. and its trading partners, particularly China.

The committee also gave an important nod to those worried about slower growth: It dropped the word "patient" to describe its policy approach. The characterization was a key part of the Fed "pivot" earlier this year that signaled to the market a more dovish approach to rates.

Bottom line: The Fed didn't predict outright that a cut is coming, but opened the door enough by tweaking certain language to satisfy a stock market hungry for lower rates.