Federal Reserve hikes interest rates but cuts its outlook for U.S. economy in 2019
Source: The Washington Post
By Heather Long December 19 at 2:02 PM
The Federal Reserve raised short-term interest rates Wednesday, a widely expected move that President Trump has called foolish but the central bank felt was necessary to keep the U.S. economy thriving.
The Fed believes this rate increase will keep the economy from overheating, but the central bank downgraded its economic outlook for 2019 and indicated fewer rate hikes next year.
In September, the Fed predicted it would do three more interest rate hikes in 2019. Now the Fed predicts two hikes, a sign of more caution. Fed leaders also lowered their growth forecast for next year from 2.5 percent to 2.3 percent, a signal that headwinds are rising. The central bank said it was closely watching global economic and financial market developments.
The Fed is now acknowledging some of the early signs of weakness in the economy, said Lindsey Piegza, chief economist for Stifel Fixed Income. Fed officials see the expansion slowing and potentially coming to an end so there is no longer a need going forward for aggressive hikes like we had in 2017 and 2018.
Read more: https://www.washingtonpost.com/business/2018/12/19/federal-reserve-hikes-interest-rates-cuts-its-outlook-us-economy/1
Apollyonus
(812 posts)More misery for middle class and the poor.
PSPS
(13,608 posts)You can't haggle the price as much when interest rates are too low.
The stock market goes down only because some equity will move into bonds.
FBaggins
(26,756 posts)The current market levels have already priced in a substantial chance of a moderate recession. Current fears were that the Fed would continue to raise rates aggressively to keep the economy from overheating. Their recognition that this is currently unnecessary is likely a good sign that the Fed is unlikely to cause a recession itself.
All else being equal, this is probably a good sign.