The big news from the Federal Reserve: no more interest rate hikes will be coming this year. In a unanimous move, the Fed Open Market Committee yesterday turned significantly from its policy projections just three months earlier: Committee members had estimated in December that two rate hikes would be appropriate in 2019, after four increases in 2018.
The move came alongside reduced expectations in GDP growth and inflation and a bump higher in the unemployment rate outlook. Fed officials now see economic gains of just 2.1 percent this year, down from a 2.3 percent estimate in December, and inflation reaching 1.8 percent, down 0.1 percentage point. The unemployment rate for this year is now seen at 3.7 percent, up 0.2 percentage points from December.
In the statement explaining its decision, the committee said economic activity “has slowed” even though the labor market remains “strong.” More specifically, the statement said “recent indicators point to slower growth of household spending and business fixed investment in the first quarter,” when economic growth is expected to be modest.
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