New Fed Chair has called for cuts and a communications overhaul
The US Federal Reserve has elected to hold its overnight interest rate steady between 3.5 and 3.75 per cent at the conclusion of the Federal Open Markets Committe (FOMC).
"Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little," a release accompanying the decision reads. "Inflation remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability."
The statement was notably far shorter than those delivered under past Fed Chair Jerome Powell. The decision to hold rates steady was made with no governors dissenting, the first time in several FOMC meetings where there has been no dissent.
This meeting was the first helmed by new Fed Chair Kevin Warsh. A hold was widely expected given relative strength in the US economy, with unemployment around 4.3 per cent and inflation still high relative to the central bank's target rate.
While Warsh was appointed by President Trump amid the President's frequent calls for rate cuts, analysts expect a neutral tone from the new Fed Chair. In the past, Warsh has spoken about his dislike for forward guidance about monetary policy. Bond markets are currently pricing in a 25 basis point interest rate hike in December.
