FOMC announcement: Fed keeps interest rates steady

Irving Hamilton
November 10, 2018

As expected, the Federal Reserve held off on raising interest rates at its policy meeting today, leaving the federal funds rate at 2 to 2 ¼%.

The federal open market committee, the central bank's rate-setting body, gave an upbeat assessment of the United States economy as it voted unanimously to hold the federal funds rate at a range of 2 per cent to 2.25 per cent.

However, the committee said it still expected to hike rates again this year.

As was widely expected, the central bank decided not to raise interest on Thursday, keeping its benchmark overnight lending rate in the current range of 2% to 2.25%.

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The Fed in September raised its benchmark federal funds rate for the third time this year, citing the strong labor market and healthy spending by consumers and businesses. "By the middle of next year, however, we expect economic growth to slow below its potential pace, which would force the Fed to the sidelines", he said in a note. "Risks to the economic outlook appear roughly balanced", the FOMC said. "There were a couple words that were more muted - that business investment had "moderated" from its earlier pace". Unemployment is at 3.7%, the lowest in 48 years, and wages are rising.

U.S. stocks, which had rallied broadly on Wednesday after the results of the congressional elections, turned lower as the Fed's statement offered no indication the central bank might slow the pace of its rate increases.

The Fed's policy decision was unanimous.

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