Fed will be 'patient' on U.S. rate hikes

Credit: Reuters Studio
Published on January 30, 2019 - Duration: 01:28s

Fed will be 'patient' on U.S. rate hikes

The U.S. Federal Reserve held interest rates steady and vowed to be patient in further lifting borrowing costs.

Fred Katayama reports.

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Fed will be 'patient' on U.S. rate hikes

The U.S. Federal Reserve held interest rates steady on Wednesday.

It also vowed to be patient in further lifting borrowing costs.

That's the clearest signal yet the tightening cycle it began in 2015 may have ended.

Fed chairman Jerome Powell: (SOUNDBITE) (English) FEDERAL RESERVE CHAIRMAN JEROME POWELL, SAYING: "Financial conditions tightened considerably late in 2018, and remain less supportive of growth than they were earlier in 2018.

And, while most of the incoming domestic economic data have been solid, some surveys of business and consumer sentiment have moved lower, giving reason for caution." Powell also said the central bank will likely stop trimming its $4 trillion balance sheet sooner, leaving it with more assets than previously expected.

U.S. stocks rallied on the Fed statement, pushing the Dow above 25,000, while the U.S. dollar and short-term yields fell.

Riverfront Investment Group's chief investment strategist, Chris Konstantinos: (SOUNDBITE) (English) RIVERFRONT INVESTMENT GROUP, CHIEF INVESTMENT STRATEGIST AND DIRECTOR OF INTERNATIONAL EQUITY, CHRIS KONSTANTINOS, SAYING: "Well, I think, it's fascinating, because, if you look at how quickly that... if you look at the bond market, and you'll get Fed funds futures, how quickly over the last few weeks we move from, you know, having numerous rate hikes in 2019 to having zero.

So, while I think it's great that the markets rallying today, I think it's very constructive, I also think that the market has been anticipating a more dovish statement for some time now." Contracts tied to the Fed's policy rate continued to price about a one-in-four chance of a rate hike in 2019.

And contracts maturing in 2020 signaled a small, but rising, chance of a rate cut then.

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