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.”
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.
“As always, there is no preset path for policy,” Powell said. “And particularly with muted inflation readings that we’ve seen coming in, we will be patient as we watch to see how the economy evolves.”
Powell’s latest comments late last year came as U.S. equities finished their worst year in over a decade. The Dow fell 5.6 percent, while the S&P 500 lost 6.2 percent and the Nasdaq Composite fell 4 percent.
Furthermore, December alone resulted in the Dow falling 8.7 percent and the S&P 500 losing 9 percent, making it the worst December since 1931. However, as evidenced by the latest mentions of patience, it appears the Fed is finally paying closer attention to the pulse of the markets.
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