The U.S. Federal Reserve holds its last policy meeting of 2019 on Wednesday, hav...
WASHINGTON - The U.S. Federal Reserve holds its last policy meeting of 2019 on Wednesday, having completed a year-long U-turn that saw it abandon a tightening cycle and lower borrowing costs three times in response to the global trade war.
The Fed is expected to leave its federal funds rate unchanged at a level between 1.5% and 1.75% when it ends a two-day policy meeting on Wednesday and reiterate that it will likely remain at that level through much if not all of 2020, a presidential election year. “No change in rates, only cosmetic changes to the statement, and repetition of the message that the Fed is on hold with a high bar for making a move,” Cornerstone Macro analyst Roberto Perli wrote in his outlook for this week’s meeting.
Policymakers also came to terms with the fact that a startlingly low U.S. unemployment rate of 3.5% can apparently coexist with tame inflation. That contradicts the common assumption that tight labor markets cause prices to rise, and made the Fed more comfortable reducing interest rates without fear of laying the groundwork for future problems.Some of the storm clouds around trade may be lifting.
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