WASHINGTON – The Federal Reserve left its key interest rate unchanged Wednesday and projected no rate hikes this year, reflecting a dimmer view of the economy as growth weakens in the United States and abroad.
The Fed said it was keeping its benchmark rate – which can influence mortgages, credit cards and home equity lines of credit – in a range of 2.25 percent to 2.5 percent.
It also announced that by September, it will no longer reduce its bond portfolio, a change intended to help keep long-term loan rates down.
Combined, the moves signal no major increases in borrowing rates for consumers and businesses. And together with the Fed's dimmer forecast for growth this year – 2.1 percent, down from a previous projection of 2.3 percent – the statement it issued after its latest policy meeting suggests it's grown more concerned about the economy. What's more, with inflation remaining mild, the Fed feels no pressure to tighten credit.
The Fed's policymakers now project one rate hike in 2020 and none in 2021. The Fed had raised rates four times last year and a total of nine times since 2015.
The central bank's theme Wednesday, in its statement and in a news conference by Chairman Jerome Powell, is that it will remain continually “patient” about pursuing any further rate hikes.
“We think the Fed's forecasts are still too upbeat,” said Michael Pearce, senior U.S. economist at Capital Economics, saying he thinks sluggish growth will lead the Fed to start cutting rates early next year.
The Fed's decision Wednesday was approved on an 11-0 vote.