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FOMC leaves rates unchanged; NAFCU's Long predicts 'stable' rates in 2020
The Federal Open Market Committee (FOMC), as expected, left the federal funds target rate at a range of 1.5 percent to 1.75 percent at the conclusion of its two-day monetary-policy setting meeting. This follows three rate cuts - totaling 75 basis points - in 2019.
"The Committee's statement echoed remarks about the economy made in the last several statements, including low unemployment, a strong labor market, solid job gains, and strong growth in household spending," said NAFCU Chief Economist and Vice President of Research Curt Long in a new FOMC Macro Data Flash report. "The statement also made clear that inflationary pressures and international developments will be a factor to where interest rates will go.”
While overall and core inflation remain below the Fed's 2 percent target, the committee expressed that "inflation expectations are little changed." Of note, more than half of the committee members projected that the federal funds rate will remain unchanged throughout 2020.
Additionally, the committee's economic projections were mostly unchanged, with the committee anticipating rates to slowly rise in 2021 and 2022.
"This conforms with NAFCU’s view that many of the recessionary risks that appeared earlier in the year have now receded, paving the way for steady growth and stable interest rates in 2020," Long added.
More on the meeting's outcomes can be found in the Macro Data Flash report. The FOMC will next meet Jan. 28-29, 2020, for its first meeting of the new year; its tentative meeting schedule for 2020 can be viewed here.