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NEW YORK — In a unanimous decision, members of the Federal Reserve Open Market Committee (FOMC) opted to hold interest rates steady at 2.25 to 2.50 percent.
Eleven of the 17 committee members indicated they saw no need for any interest rate hikes this year, and the FOMC anticipate just one rate increase in 2020.
The Fed also lowered its forecast for America’s gross domestic product, noting that growth will be down slightly this year and in 2010. Members also expect unemployment to rise slightly higher.
“We anticipated a cautious tone from the Fed, in keeping with recent comments that suggest officials are comfortable with the current policy stance and see no immediate need to get back to raising rates,” said Josh Nye, a senior economist at RBC.
“But today’s policy statement and projections were still more dovish than we expected,” he added.
Nye said the Fed’s “dot plot,” now shows a majority of FOMC members think the current rate setting will remain appropriate through the end of 2019.
In December, the FOMC had projected two interest rate hikes in 2019.
“These new projections suggest the Fed’s base case is to leave policy steady this year unless growth or inflation surprise us on the upside to warrant a return to tightening rates,” said Nye.
“We do expect a rebound in Q2 growth, but it looks like that might not be enough to pull the Fed from the sidelines in the near-term,” he explained.