On Wednesday, the Federal Reserve decided to keep the federal funds rate unchanged at a range of 2.25% to 2.5%. The policy rate is what banks charge each other for lending funds overnight.
At the first Federal Open Market Committee meet of 2019, central bankers expressed caution amidst global economic uncertainties, such as trade tensions, potential headwinds from economic slowdowns in China and Europe, and the recent U.S. government shutdown. The U.S. domestic macroeconomic conditions seem sanguine through, with low unemployment and strong job gains.
Although the Fed had earlier expected two hikes for the policy rate for this year, it seems that central bankers are now tilting more towards a ‘wait-and-see’ mode.
"The case for raising rates has weakened somewhat," said Fed chair Jerome Powell at a press conference following the committee's January rate-setting meeting. "We believe we can best support the economy by being patient and evaluating the outlook before making any future adjustment to policy."