Federal Reserve Keeps Rates Steady; Lines up December Hike

Federal Reserve Keeps Rates Steady; Lines up December Hike

Investing.com  | Nov 08, 2018 02:40PM ET

The Fed kept rates unchanged on Thursday.

Investing.com - The Federal Reserve left interest rates on hold Thursday, but delivered an upbeat assessment of the economy and labor market, reaffirming expectations for a December rate hike.

The Federal Open Market Committee kept the overnight funds rate unchanged at 2.00% to 2.25% at the conclusion of its two-day policy meeting.

The Fed raised rates by a quarter point for the third time this year in September and indicated one more rate hike for December.

The Fed said that "the labor market has continued to strengthen," with economic activity rising at a "strong" rate, reinforcing investor expectations for a rate hike at the December meeting.

"Job gains have been strong, on average, in recent months, and the unemployment rate has declined," the Fed said. "Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier in the year."

The mention of moderating business fixed investment was one of the small changes from the Fed's previous statement.

Data last week showed that the U.S. economy produced more jobs than expected last month and wage growth remained intact. The unemployment rate held steady at a 48-year low.

Some market participants had been keen to get a sense of whether the October stock market rout would feature in the statement and possibly give the Fed reason to pause. But language in the statement was largely as expected, paving the way for the dollar to extend gains on improved expectations for a December hike.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.62% to 96.40.

Stock market reaction was muted. The S&P sold off quickly and rebounded just as quickly to settle in the same area it was before the statement came out.

Nearly 80% of traders expect the Federal Reserve to hike rates in December, above the 72% odds a day earlier, according to investing.com's Fed rate monitor tool.

Federal Reserve Chairman Jerome Powell will not follow up the monetary policy statement with a press conference, but that will change from the Dec. 19 meeting, with a press conference then expected after every Fed meeting.

Related News

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Discussion
Write a reply...
Please wait a minute before you try to comment again.

Fusion Media will not accept any liability for loss or damage as a result of reliance on the information contained within this website including data, quotes, charts and buy/sell signals. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible. Currency trading on margin involves high risk, and is not suitable for all investors. Trading or investing in cryptocurrencies carries with it potential risks. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Cryptocurrencies are not suitable for all investors. Before deciding to trade foreign exchange or any other financial instrument or cryptocurrencies you should carefully consider your investment objectives, level of experience, and risk appetite.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures), Forex and cryptocurrencies prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn’t bear any responsibility for any trading losses you might incur as a result of using this data.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (UK) English (India) English (Canada) English (Australia) English (South Africa) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 中文 香港 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
NoYes
CancelYes
Saving Changes

+