Fed Leaves Rates Unchanged as Expected, Dot Plot of Future Policy Splits

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The dot plot of future expectations has split into two camps: Those who expect the status quo and those who see cuts.

The Wall Street Journal reports Fed Holds Rates Steady, Hints at Possible Cut if Outlook Dims.

While the central bank’s rate-setting committee expected the economy’s expansion to continue, “uncertainties about this outlook have increased,” it 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 to sustain the expansion.”

Nine of 10 members of the rate-setting committee voted to maintain the federal-funds rate in a range between 2.25% and 2.5%. St. Louis Fed President James Bullard dissented in favor of lowering rates, the first dissent since Fed Chairman Jerome Powell took lead of the central bank in February 2018.

Press Release

Here is the entire Press Release of the FOMC decision.

What Changed?

The above is from the WSJ Statement Tracker.

Reaction

There is not much of a reaction so far in the stock markets or bond markets.

The yield on the 10-year note declined a basis point to 2.046%, holding above the 2% mark for now but the next poor economic report will likely turn that into a one-handle.

For all of today's heightened anticipation, the results were quite anticlimactic.

Mike "Mish" Shedlock

Comments (20)
No. 1-15
JonSellers
JonSellers

No way the Fed could increase rates with the 10 year heading south. Holding steady is the right thing to do. Wall Street seems to be okay with it for the moment.

bradw2k
bradw2k

We are uncertain but still hoping that the stock market expansion gets going again. If it's down at our next meeting, we'll do our thing.

Gasmire
Gasmire

More like if Trump is reelected we'll start doing our thing.

Greggg
Greggg

The US slide to ZIRP/NIRP has begun.

LawrenceBird
LawrenceBird
  1. lower rates does not cure Trump trade policy
  2. zero rates had no effect on inflation rate
  3. bridge to sell if anyone believes cpi or deflator measures inflation
  4. is unemployment rate also a fake number? why the concern when at historic low?
  5. real rates by govt measures are barely over 0
  6. federal goverment less able to survive rates over 2.5% than corp america

Fed might as well let Trump or any other president set the rate; they are no longer independent so why the chirade?