The Federal Reserve, facing heavy pressure from President Trump to lower borrowing costs, left interest rates unchanged Wednesday (June 19) but made clear that it was leaning toward cutting rates because of rising risks from trade tensions and a softer global economy.
As reported by the Los Angeles Times, wrapping up a two-day meeting, Fed policymakers decided, for now, to maintain their key rate — a benchmark for credit cards, auto loans and other short-term consumer lending — at the current level of 2.25% to 2.5%.
But the central bank made a significant shift in its posture on the future direction of monetary policy. About half of the Fed’s 17 monetary policy officials now foresee one or two quarter-point rate cuts later this year.
Just three months ago, none of them expected the rate to go down, and some were even looking for it to go higher.
“Fed breaks new ground forecasting rate cuts,” said Capital Economics in its research report, which predicted a quarter point rate cut in September and another in December.
Other economists, as well as financial markets, have been betting the Fed will lower rates as soon as its next meeting at the end of July.
Stock markets changed little Wednesday after the Fed’s decision, which was largely expected.
The Fed hasn’t dropped its benchmark rate in more than a decade, and as recently as mid-December officials hiked interest rates to forestall a possible overheating in the U.S. economy.
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