A split Federal Reserve left interest rates unchanged during its two-day meeting this week, and despite outward pressure from both the markets and President Trump, signaled there will be no cuts in 2019.
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Policymakers at the U.S. central bank -- who dropped the word "patient" from the statement, in a nod to those worried about the evolving economic outlook -- said they expect one rate cut next year and one rate hike in 2021.
"In light of these uncertainties and muted inflation pressures, the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective," the FOMC statement said.
Wall Street was closely watching the decision, as traders clamored for an interest rate cut. Trump also suggested on Tuesday that he could strip Powell of his chairmanship if the Fed did not acquiesce and lower borrowing costs, saying "let's see what he does" when asked whether he still wants to demote Powell.
"I think the law is clear I have a four-year term, and I intend to serve it out," Powell said during a post-statement press conference.
The U.S. central bank voted 9-1 to keep the benchmark federal funds rate steady at 2.25 percent to 2.5 percent, where it's been since a rate hike in December. St. Louis Federal Reserve President James Bullard was the one dissenting vote; he had suggested at the beginning of June the Fed needed to cut rates due to muted inflation, the inverted yield curve and ongoing uncertainty about trade.
According to a "dot plot" of FOMC members' expectations, eight members favor one rate cut this year; eight prefer for rates to stay unchanged; and one wants a rate hike.
Despite Powell's comments, traders currently are pricing in a 100 percent chance of a rate cut during the FOMC's July meeting.
"Still, while many market participants see these projections as confirmation of at least one rate cut either this year or next, the Fed could still take a wait-and-see approach for some time," said Ben Ayers, Nationwide's senior economist. "Economic growth has slowed but remains solid, while the ultra-low unemployment rate points to tight labor market conditions. The key continues to be the path for inflation, as well as inflation expectations across the economy."