In a move that was widely expected, the Federal Reserve maintained its target fed funds rate range of between 1.5% and 1.75% on Wednesday. The Fed also reassured investors the U.S. economy is strong and the labor market remains solid.
“The Committee will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures, as it assesses the appropriate path of the target range for the federal funds rate,” the Fed said in a statement.
The rate cut comes after the U.S. added 255,000 jobs in November, far exceeding the 187,000 jobs economists were expecting. Wage growth was up 3.1% in the month, and the U.S. unemployment rate fell to 3.5%, it’s lowest level in 50 years.
All 10 members voted unanimously to maintain current rates.
The Federal Reserve has been under pressure all year from President Donald Trump to cut interest rates, raising concerns about the Fed’s independence.
“The Fed should lower rates (there is almost no inflation) and loosen, making us competitive with other nations, and manufacturing will SOAR! Dollar is very strong relative to others,” Trump tweeted earlier this month.
The median target rate on the Fed’s dot plot for year-end 2020 dropped from 1.875% to 1.625%, in-line with expectations following the Fed’s last rate cut in October. Thirteen officials anticipate interest rates will not change in 2020, while four are predicting one 0.25% rate hike next year, according to the updated dop plot.
The Fed decision comes after global growth rates have been under pressure in recent quarters.
U.S. GDP growth dropped from 2% in the second quarter to 1.9% in the third quarter and is down from 3.1% in 2018.
In October, the International Monetary Fund cut its 2019 global economic growth forecast for the third time this year from 3.2% to 3%. That updated target represents the slowest pace of global economic growth since the financial crisis in 2008 and 2009.
The SPDR S&P 500 ETF Trust (NYSE: SPY) traded slightly higher by 0.1% after the Fed announcement.
The yield on 10-year U.S. Treasury bonds declined slightly on Wednesday to 1.812%, down 0.009% on the day.