Federal Reserve policymakers have halted their campaign to steadily raise interest rates, but their rate-tightening efforts might not be over, according to the minutesfrom the central bank\u2019s January meeting.<\/p>\n\n\n\n

The Fed at its January meeting left rates unchanged and signaled it was ready to stop hiking rates, sending stocks surging, though Chairman Jerome Powell gave no indication as to whether that pause will end sometime this year. The summary of deliberations from the Fed\u2019s rate-setting committee released today shows that central bank officials don\u2019t know yet.<\/p>\n\n\n\n

Many members of the policy-setting committee \u201csuggested that it was not yet clear\u201d whether there will need to be \u201cadjustments\u201d to the central bank\u2019s main borrowing rate later in 2019, the minutes say. Several officials argued that more hikes \u201cmight prove necessary only if inflation outcomes were higher\u201d than currently projected.<\/p>\n\n\n\n

But several other officials said if the U.S. economy continues in line with what they expect, they would \u201cview it as appropriate\u201d to raise rates later this year.<\/p>\n\n\n\n

\u201cIn other words, if the economy remains in good shape, we haven\u2019t necessarily seen the last of the interest rate hikes,\u201d said Greg McBride, chief financial analyst at Bankrate.com.<\/p>\n\n\n\n

Still, the document did have more specific good news for the stock market, suggesting the Fed will announce later this year a plan to stop reducing the massive stockpile of bonds that it bought in the wake of the 2008 financial crisis to spur growth. The Fed\u2019s balance sheet reduction also has the effect of tightening credit conditions, alongside its rate hikes.<\/p>\n\n\n\n

\u201cAlmost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve\u2019s asset holdings later this year,\u201d according to the minutes. \u201cSuch an announcement would provide more certainty about the process for completing the normalization of the size of the Federal Reserve\u2019s balance sheet.\u201d<\/p>\n\n\n\n

The Fed\u2019s decision to pause its rate hike campaign in January, after signaling in December that as many as two more increases could be coming in 2019, sparked questions among investors about whether the economic outlook had changed significantly in the intervening weeks or if the central bank was merely reacting to wild swings in the stock market.<\/p>\n\n\n\n

The central bank minutes say that indeed the outlook \u201chad become more uncertain\u201d since December, while nodding to the fact that \u201cfinancial market volatility had remained elevated over the intermeeting period.\u201d Officials also cited other factors: slower growth, deteriorating consumer and business confidence, trade tensions and the partial government shutdown.<\/p>\n\n\n\n

But clearly financial markets were top of mind for Fed officials, with the views of \u201cmarket participants\u201d garnering several mentions.<\/p>\n\n\n\n

\u201cConsiderations of [rising] risks drove the committee to emphasize its \u2018patient\u2019 mantra with respect to future rate hikes,\u201d said Curt Long, chief economist for the National Association of Federally-Insured Credit Unions. \u201cThat is certainly a nod to jittery markets, which seem to have been comforted by the shift in tone from December.\u201d<\/p>\n\n\n\n

The Fed is willing to be patient about further hikes as it waits to determine the effects of those factors, as well as the central bank\u2019s own interest rate hikes, on the broader economy.<\/p>\n\n\n\n

\u201cA patient approach would have the added benefit of giving policymakers an opportunity to judge the response of economic activity and inflation to the recent steps taken to normalize the stance of monetary policy,\u201d the minutes say.<\/p>\n\n\n\n

\u201cFurthermore, a patient posture would allow time for a clearer picture of the international trade policy situation and the state of the global economy to emerge and, in particular, could allow policymakers to reach a firmer judgment about the extent and persistence of the economic slowdown in Europe and China,\u201d they add.<\/p>\n\n\n\n

The Fed also indicated worry that financial market participants misinterpreted its message in December as a lack of recognition of economic risks, with officials debating whether their aggregated projections of future rate hikes misleadingly suggested that \u201cpolicy was on a preset course.\u201d<\/p>\n\n\n\n

“[M]arket participants appeared to interpret FOMC communications at the time of the December meeting as not fully appreciating the tightening of financial conditions and the associated downside risks to the U.S. economic outlook that had emerged since the fall.”<\/p>\n","protected":false},"excerpt":{"rendered":"

Federal Reserve policymakers have halted their campaign to steadily raise interest rates, but their rate-tightening efforts might not be over, according to the minutesfrom the central bank\u2019s January meeting. The Fed at its January meeting left rates unchanged and signaled it was ready to stop hiking rates, sending stocks surging, though Chairman Jerome Powell gave no […]<\/p>\n","protected":false},"author":2,"featured_media":64,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true},"categories":[12,3],"tags":[13,14,16],"jetpack_featured_media_url":"https:\/\/www.uspolitics.news\/wp-content\/uploads\/2019\/02\/Fed-undecided-on-whether-to-raise-rates-in-2019.jpg","jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p6txMX-11","_links":{"self":[{"href":"https:\/\/www.uspolitics.news\/wp-json\/wp\/v2\/posts\/63"}],"collection":[{"href":"https:\/\/www.uspolitics.news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.uspolitics.news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.uspolitics.news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.uspolitics.news\/wp-json\/wp\/v2\/comments?post=63"}],"version-history":[{"count":1,"href":"https:\/\/www.uspolitics.news\/wp-json\/wp\/v2\/posts\/63\/revisions"}],"predecessor-version":[{"id":65,"href":"https:\/\/www.uspolitics.news\/wp-json\/wp\/v2\/posts\/63\/revisions\/65"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.uspolitics.news\/wp-json\/wp\/v2\/media\/64"}],"wp:attachment":[{"href":"https:\/\/www.uspolitics.news\/wp-json\/wp\/v2\/media?parent=63"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.uspolitics.news\/wp-json\/wp\/v2\/categories?post=63"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.uspolitics.news\/wp-json\/wp\/v2\/tags?post=63"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}