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Federal Reserve stands pat in November and remains on track for December hike
At its 7–8 November monetary policy meeting, the Federal Reserve’s Open Market Committee (FOMC) unanimously decided to maintain its target range for the federal funds rate at between 2.00% and 2.25%. The move was widely expected by market analysts, most of whom see the next rate hike occurring at the following meeting, scheduled for 18–19 December.
The November meeting was largely uneventful and seemed to confirm predictions that the Fed will hike rates in December. This was highlighted by the continued emphasis on the strength of economic momentum—particularly in the labor market amid a nearly 50-year low unemployment rate—and considering inflation dynamics remained within the Fed’s target range. Noticeably, the communiqué did not reference the tumble observed in stock markets in October, signaling the Fed was not exceedingly concerned with increased financial volatility. However, the November statement did acknowledge that “growth of business fixed investment has moderated from its rapid pace earlier in the year”.
Although this month’s meeting did not reveal much novel information, several conferences and interviews given by Fed Chairman Jerome Powell in October provided additional insight into the FOMC’s thinking regarding the path of macroeconomic developments in the future.
Indicating that upside surprises in wage growth in coming months will be unlikely to turn the Fed more hawkish, Powell stated:
“We have seen a gradual increase in wages. And my own expectation would be that we would continue to see some of that. And it would be quite welcome. We don’t think that we’re in particularly imminent danger of a situation where wage increases are going to promote price inflation.”
Moreover, signaling that the Fed still sees ample room to increase rates and will most likely remain on track with regular hikes in the coming quarters, Powell said:
"Interest rates are still accommodative, but we’re gradually moving to a place where they’ll be neutral. We may go past neutral, but we're a long way from neutral at this point, probably.”
The U.S. Federal Reserve’s median interest rate projection for 2019 is 3.25%, indicating four more interest rate hikes between now and the end of 2019. Our panel expects the federal funds rate to end 2019 at 3.16%. For 2020, FocusEconomics panelists see the federal funds rate ending at 3.08%.
United States - Money Data
|Money (annual variation in %)||6.7||6.2||5.8||6.8||5.6|
5 years of economic forecasts for more than 30 economic indicators.
United States Money Chart
United States Facts
|Bond Yield||3.11||-0.43 %||Nov 15|
|Exchange Rate||1.13||0.65 %||Nov 15|
|Stock Market||25,289||0.02 %||Nov 15|
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United States: Retail sales growth sharply rebounds in October on surging sales of fuel and motor vehicles
November 15, 2018
Retail sales expanded 0.8% on a seasonally-adjusted month-on-month basis in October, bouncing back markedly from the revised 0.1% contraction logged in September (previously reported: +0.1% month-on-month) and exceeding market expectations of 0.5% growth.
November 14, 2018
Consumer prices rose 0.3% from the previous month in October, up from September’s 0.1% increase and matching analysts’ expectations.
November 8, 2018
At its 7–8 November monetary policy meeting, the Federal Reserve’s Open Market Committee (FOMC) unanimously decided to maintain its target range for the federal funds rate at between 2.00% and 2.25%.
November 2, 2018
The October employment report showed the U.S. economy adding jobs at a strong pace in the month.
November 1, 2018
The U.S. manufacturing sector slowed in October but continued to register solid growth.