Skip to main content

For the first time in recent memory, No Rate Increases in Near Future?



WASHINGTON — For the first time in recent memory, the Federal Reserve has indicated it doesn’t anticipate any additional rate increases. A statement made following the just-concluded meeting of the Federal Open Market Committee (FOMC) is a break from another statement made just a month ago, and runs counter to the forecast from many that the Fed will raise interest rates two times in 2019.

In its statement, the Fed said the economy remains “solid” and that it expects economic growth to continue. 

But the FOMC also said, “In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.”


As it typically states following its meetings, the Fed said it will continue to assess conditions relative to its objective of a 2% inflation rate. The inflation rate has been sluggish for more than a decade.

Another Surprise
In another surprise announcement, the Fed also announced it is now ready to slow down or even reverse its ongoing efforts to shrink its bond portfolio, even though in 2018 it indicated it remained committed to doing so. 

After amassing more than $4 trillion in Treasury securities and mortgage bonds following the financial crisis, the  Fed has been reducing its holdings by approximately $45 billion per month.  
“The committee is prepared to adjust any of the details for completing the balance sheet normalization in light of economic and financial developments,” the Fed said in a statement, indicating it is even prepared to increase holdings if necessary. 

In addition, the Fed also issued a statement that “after extensive deliberations and thorough review of experience to date, the Committee judges that it is appropriate at this time to provide additional information regarding its plans to implement monetary policy over the longer run. Additionally, the Committee is revising its earlier guidance regarding the conditions under which it could adjust the details of its balance sheet normalization program.”

Additional Statement
Accordingly, the Fed said all participants agreed to the following:

  • The Committee intends to continue to implement monetary policy in a regime in which an ample supply of reserves ensures that control over the level of the federal funds rate and other short-term interest rates is exercised primarily through the setting of the Federal Reserve's administered rates, and in which active management of the supply of reserves is not required.
  • The Committee continues to view changes in the target range for the federal funds rate as its primary means of adjusting the stance of monetary policy. The Committee is prepared to adjust any of the details for completing balance sheet normalization in light of economic and financial developments. Moreover, the Committee would be prepared to use its full range of tools, including altering the size and composition of its balance sheet, if future economic conditions were to warrant a more accommodative monetary policy than can be achieved solely by reducing the federal funds rate.


Comments

Popular posts from this blog

NCOFCU Promotes its First Class of Credit Union Professionals (CCUP)

Announcing the First Class of Certified Credit Union Professionals (CCUP) Key West, Florida – The National Council of Firefighter Credit Unions Inc. (NCOFCU) is thrilled to announce the inaugural class of Certified Credit Union Professionals (CCUP), taking a significant step towards advancing the standards of professionalism and expertise in credit union governance. This elite certification program, launched during the NCOFCU annual educational conference, provides participants with a unique opportunity to enhance their professional development, gain specialized training, and expand their network while receiving guidance from industry leaders. Over the course of two years, participants will have engaged in comprehensive sessions covering critical topics such as governance best practices, regulatory compliance, risk management, and strategic planning. "Earning the CCUP certification signifies a professional's 2-year commitment to excellence and continuous learning in cred...

NCOFCU Newsletter

The Bucket Coach is a financial advice book designed by Fire Services Credit Union, Tronto, Canada. and written exclusively for Fire Fighters It's a practical guide for household financial management, including investments, credit and mortgages, and retirement. Developed with contributions from Fire Fighters," NCOFCU Newsletter : " Kevin Connolly Chief Executive Officer    Fire Services Credit Union Phone: 416-440-1294 ext 301  Toll Free: 1-866-833-3285 E-mail:  kevin@firecreditunion.ca 1997 Avenue Rd Toronto, ON M5M 4A3 

The Fed announces quarter-point interest rate cut.

  After nine months of staying on the sidelines, the Federal Reserve on Sept. 17 announced a quarter-percentage-point cut, likely the first in a series of reductions to usher in lower borrowing rates for consumers. The rate cut – the Fed’s first since late 2024 – lowers the Fed’s benchmark interest rate to a range of 4% to 4.25%. Officials signaled the possibility of two more rate cuts this year. Typically, the Fed hikes rates or keeps them steady to tame inflation. The central bank lowers rates to juice the economy. While the Fed previously held back on rate cuts due to inflation concerns, a series of disappointing jobs reports showed a weakening labor market. While there are signs that tariffs are starting to show up in consumer prices, Powell previously said a “reasonable base case” is that tariffs spur a one-time price shift rather than a more persistent inflationary effect. "Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up ...

MAP, Dolphin Debit Enter Into New Partnership

  SEATTLE–The CUSO  Member Access Processing  (MAP), a provider of Visa DPS debit, credit, ATM, and digital payment processing, said it is entering into a partnership with Dolphin Debit, the ATM and ITM management company.  “We are excited to partner with Member Access Processing,” Joe Woods, SVP-marketing & partnerships at  Dolphin Debit , said in a statement. “Our two organizations have a strong track record of providing exceptional service and solutions for our clients.   We are confident that this partnership will be a great success for both organizations and the credit unions we serve.”  Dolphin Debit noted it has partnerships with many credit union associations and operates all makes and models of ATM equipment in various branch and off-premise venues, working with over 350 financial institutions across the United States.  ‘Strengthened’ Ability “At MAP, we’re committed to helping credit unions serve their members and grow their car...

Navigating Staff & Employee Compensation

The following videos will help you to navigate the complexities of salary and benefits for your credit union staff and employees. __ ______________________________________________ Check out NCOFCU's additional features: First Responder Credit Union Academy Podcasts YouTube Mini's Blog Job Board