Fed holds rates steady, December hike on tap
The Federal Reserve, as expected, left rates unchanged at the conclusion of the two-day November meeting on Thursday. Policymakers noted the committee "expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective over the medium term," according to the statement. Stocks were mixed after the decision was announced.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 44782 | -128.65 | -0.29% |
| SP500 | S&P 500 | 6047.15 | +14.77 | +0.24% |
| I:COMP | NASDAQ COMPOSITE INDEX | 19403.947849 | +185.78 | +0.97% |
The American jobs market is hot. The unemployment rate sits at 3.7 percent, as of October, which is the lowest level since 1969. Last month, employers created a robust 250,000 positions and wages rose at fastest pace in nearly a decade.
The next rate hike is expected in December and would mark the fourth and final one of 2018. Federal Reserve Chairman Jerome Powell will not be giving a live press conference this time around. Ahead of the decision, Bankrate.com senior economic analyst Mark Hamrick said, "The target range for the federal funds rate will likely remain at 2 to 2.25 percent for now after the third boost of the year in September."
The decision may ease President Trump, who has lashed out at the central bank for raising rates “too fast,” calling the Fed the biggest threat to the U.S. economy. He has also criticized Powell’s performance, telling FOX Business he is “not thrilled” with Powell’s decisions. Business leaders, including Home Depot co-founder Bernie Marcus, joined Trump in questioning the Fed's decision making.
Policymakers at the central bank have already voted to hike the benchmark federal funds rate three times this year as the U.S. economy continues to improve.
Higher rates can impact consumers by increasing borrowing costs, which have already skyrocketed. Auto loan rates are at a nine-year high and 30-year fixed mortgage rates recently climbed to their highest level in seven years. Mortgage rates are also spiking.