Fed Holds Key Interest Rate Steady, But Increase Expected In December
A day before President Trump was expected to name their next leader, Federal Reserve policymakers decided to hold a key interest rate steady at between 1 percent and 1.25 percent. However, analysts are still looking for a rate increase at the central bank's next meeting, in mid-December.
The Fed's post-meeting statement would seem to support that expectation. Policymakers slightly upgraded their assessment of economic growth from moderate to "solid" despite disruptions from hurricanes Harvey and Irma. And they said the labor market has continued to strengthen, despite a hurricane-related drop in payroll numbers in September.
But Fed officials also noted that inflation has remained soft, and below the 2 percent level they think is best for the economy. Some regional Fed bank presidents have suggested that because of that, the Fed should adopt a wait-and-see attitude on a December rate hike.
This may have been one of the final meetings for Fed Chair Janet Yellen. Her term expires early next year and it's expected Trump will replace her. At a Cabinet meeting Wednesday, Trump said he would announce a "new head" of the Fed Thursday afternoon. A current Fed governor, Jerome Powell, appears to be the front-runner to be nominated. He is a former investment banker and was Treasury undersecretary in the George H.W. Bush administration.
It's still possible, however, that Trump could reappoint Yellen to a second term. "I think Janet Yellen is excellent," Trump said at the Cabinet meeting. Asked if he was going to reappoint her, the president replied, "I didn't say that."
Copyright 2021 NPR. To see more, visit https://www.npr.org.