Interest rates remain the same as U.S. fed says they aren’t in a hurry to increase future hikes

Market

The U.S. Federal Reserve Chairman, Jerome Powell, has said that they are not in a hurry to raise interest rates.

In the face of the current economic pressures that the U.S is dealing with, the Federal Reserve is keeping its interest rates steady. The Fed says that it is ready to delay the reduction of its bond holdings if it will help to boost the economy.

Last year, the Central bank’s rate was raised four times and this influenced loan rates for businesses and consumers. This year, however, the Central Bank announced that it will not be raising the rates anytime soon. Its benchmark short-term rate remains within the range of 2.25 percent to 2.5 percent.

The decision of the Fed to leave the rates unchanged was welcomed by investors. After the Fed issued its policy statement, the Dow Jones Industrial Average rose about 200 points and after an hour it climbed to about 430 points.

Speaking at a news conference about the Fed’s decision on the rate hike, Chairman, Jerome Powell said that the present situation of the economy calls for patience: “We are ready to be patient” he added.

For some time now, the Fed has been reducing its bond portfolio and this has contributed to higher borrowing rates. For the economy to remain progressive, however, the Fed will need to slow down or put an end to its bond portfolio strategy. This will help to keep loan rates in check and boost the economy.

The central bank said, on Wednesday, that it will use all the tools at its disposal to ensure that the economy remains stable. According to the bank, it is ready to adjust its bond portfolio if it will help to improve the state of the economy.

The previous policy meeting of the Fed, which held in December, sparked fear in financial markets with many people suggesting that the Fed may tighten credit in 2019. The Fed had said that they may increase rates if they deemed it necessary to do so. However, the trade dispute with China coupled with the global slowdown and unstable stock market has given the Fed reasons not to raise rates but focus on sustaining the economy instead.

Mersiha Gadzo

I partially work as an editorial intern for Industry Module, I am journalist and online producer for Al Jazeera English. Prior to joining Al Jazeera I worked as a freelancer in Bosnia & Herzegovina and the occupied Palestinian territories. I also covered health care policy, business, and strategy for FORBES. My work has appeared at Vox, Kaiser Health News and other publications. Full bio

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