Interest Rate in USA
USA - Interest Rate
Fed indicates no urge to change rates in May; Powell signals mild concerns over low inflation
At its 30 April–1 May monetary policy meeting, the Federal Reserve’s Open Market Committee (FOMC) unanimously voted to maintain its target range for the federal funds rate at 2.25%–2.50%. The decision came as no surprise given the institution confirmed it planned no more rate hikes this year during its March meeting.
In its latest communiqué, the Fed pointed out that, although the Q1 GDP print was robust overall, “growth of household spending and business fixed investment slowed in the first quarter”. In addition, the Bank noted that both headline inflation and core inflation have been tracking below the 2.0% target in recent months, while inflation expectations remain well anchored. This signals some level of concern that inflation could stay under the Fed’s 2% objective for an extended period of time.
Meanwhile, Fed Chairman Jerome Powell struck a relatively optimistic tone during the post-meeting press conference, expressing confidence that inflation would increase over the medium-term as transitory factors subside. Furthermore, he noted that “we think our policy stance is appropriate at the moment; we don’t see a strong case for moving it in either direction”, ruling out an interest rate cut in the near future. This settled markets, which had started to price in a rate cut this year. It also reaffirmed the Fed’s policy independence in the face of criticism from President Trump, who has called for a rate cut and attempted to appoint political allies to the Fed’s Board of Governors.
Overall, our panelists saw the May policy meeting as an affirmation that the Fed would remain on hold throughout this year. Analysts at Goldman Sachs, for instance, noted that “today’s meeting further reduced the odds of a rate cut in response to low inflation, which we already saw as quite unlikely”. Meanwhile, Nomura researchers added that “at a minimum, the inflation language today suggests that the Committee is not close to cutting rates anytime soon because of disinflation risks”, and consequently “continue to expect no policy rate changes through end-2020”.
As of its March meeting, the U.S. Federal Reserve’s median interest rate projection for 2019 was 2.50%, indicating no more interest rate hikes between now and the end of 2019. FocusEconomics Consensus Forecast panelists expect the federal funds rate to end 2019 at 2.51%. For 2020, the panel expect the federal funds rate to end the year at 2.38%.
United States - Interest Rate Data
|Policy Interest Rate (%)||0.25||0.25||0.50||0.75||1.50|
5 years of economic forecasts for more than 30 economic indicators.
United States Interest Rate Chart
United States Facts
|Bond Yield||2.40||-0.43 %||May 13|
|Exchange Rate||1.12||0.65 %||May 13|
|Stock Market||25,325||0.02 %||May 13|
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May 15, 2019
Nominal retail sales fell 0.2% on a seasonally-adjusted month-on-month basis in April, markedly contrasting March’s revised 1.7% rise (previously reported: +1.6% month-on-month) and missing market expectations of 0.2% growth.
United States: Inflation edges up on strong shelter and service price gains in April; core pressures remain moderate
May 10, 2019
Consumer prices increased 0.3% over the prior month in April, down from March’s reading and market expectations, both at 0.4% month-on-month.
May 3, 2019
The April jobs report released by the Bureau of Labor Statistics (BLS) confirmed that the economy revved up after a soft patch in February.
United States: Fed indicates no urge to change rates in May; Powell signals mild concerns over low inflation
May 1, 2019
At its 30 April–1 May monetary policy meeting, the Federal Reserve’s Open Market Committee (FOMC) unanimously voted to maintain its target range for the federal funds rate at 2.25%–2.50%.
United States: ISM manufacturing index falls to two-and-a-half year low in April on weaker orders amid declining export demand
May 1, 2019
The pace of growth in the U.S. manufacturing sector softened again in April after roughly stabilizing in the first months of the year.