The Federal Reserve in the US said Wednesday that it will hold its benchmark funds rate in a range of 2.25-2.5% and indicated that there’ll be no more hikes this year.
In a unanimous move that coincides with market expectations and demands, the central bank’s policymaking Federal Open Market Committee took a sharp dovish turn from policy projections just three months earlier.
There appears to be no likelihood of a hike this year as the FOMC indicates in its post-meeting statement that it would remain “patient” before adopting any further increases.
After the announcement, the US dollar stayed lower while 10-year Treasury yields fell to their lowest level in a year.
Back in December, the central bank’s policymaking Federal Open Market Committee members estimated that two rate hikes’d be appropriate in 2019. In 2018, the Fed raised rates four times.
In addition, the Fed said its current practice of allowing up to US$50 billion of Treasuries and mortgage-backed securities (MBS) to roll off its balance sheet each month—which began in Q4 of 2017—will come to an end by September if the economy evolves “about as expected.”
The Fed’s bond buying program after the financial crisis had pushed its balance sheet to US$4.5 trillion.
The Fed would still likely have at least US$3.5 trillion in bonds, more than four times the US$800 billion more than a decade ago when the financial crisis hit.
The central bank now has about US$3.8 trillion in bonds.