“Patience” has been a mainstay in Fedspeak as of late and on Wednesday, the central bank elected to keep the federal funds rate unchanged, saying that it will be patient moving forward with respect to further rate adjustments.
In a statement, the Fed said it voted unanimously to hold its policy rate in a range between 2.25 percent and 2.5 percent. The markets cheered the move as the Dow Jones Industrial gained as many as 400 points following the news to keep rates static.
“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,” the statement said.
Furthermore, the central bank lowered its view on economic growth, changing it to “stable” as opposed to “strong.” It also said inflation gauges “have moved lower in recent months.”
Patience is Key
The decision to keep rates flat came as the Fed didn’t show much dynamism in 2018, obstinately sticking with a rate-hiking measure with four increases in the federal funds rate. That appears to have changed given the current economic landscape, and especially in the capital markets as Fed Chair Jerome Powell is now preaching patience and adaptability.