Federal Reserve raises key interest rate

Central bankers unanimously agreed under Chairman Jerome Powell to lift the federal funds rate, which controls the cost of mortgages, credit cards and other borrowing, to a range of 2.25% and 2.5%.

Posted: Dec 20, 2018 12:07 PM
Updated: Dec 20, 2018 12:21 PM

The Federal Reserve raised interest rates Wednesday for the fourth time this year, but signaled a more patient approach raising rates next year amid signs that the economy is starting to weaken.

Central bankers unanimously agreed under Chairman Jerome Powell to lift the federal funds rate, which controls the cost of mortgages, credit cards and other borrowing to a range of 2.25% and 2.5%.

At their final two-day policy-setting meeting in Washington, policymakers said they might not need to raise rates as quickly next year as they previously thought.

"Despite this robust economic backdrop and our expectation for healthy growth, we have seen developments that may signal some softening," Powell told reporters at a press conference.

The Fed chairman said there were a number of "cross-currents emerging" that prompted most officials to "modestly" lower their growth forecasts next year.

He added that officials "now think it is more likely the economy will grow in a way that calls for two rate increases next year" -- fewer than initially expected.

In their statement, policymakers made clear they are attuned to global and financial headwinds facing the US economy, and said they would continue to monitor developments and the impact on their outlook going forward.

The decision by the Fed comes after an unprecedented public pressure campaign by Trump.

On Tuesday, as officials gathered in Washington for the start of their two-day meeting, President Donald Trump urged the Fed to move cautiously "before they make another mistake."

Interest rates have gone up seven times since Trump took office. Four of those increases have been under Powell.

The president's repeated remarks have put his Fed chairman in an awkward position amid signs of economic softening and weeks of market volatility that have shaken the broad consensus that rates must go up.

Any deviation from that plan going forward could be read as a sign of Powell caving to Trump and spark a wild selloff by stoking concerns that even the Fed thinks the economy is turning south.

When asked about pressure from the White House, Powell said "We're going to do our jobs the way we've always done them," stressing the importance of the Fed's independence from political pressure. "Nothing will cause us to deviate from that."

Central bankers are now wrestling with tighter financial conditions -- mainly reflecting a stock selloff -- which has increased the odds of growth slowing next year. Fed officials slightly marked down their growth forecast for this year and 2019, dropping to 3% and 2.3%, respectively. They had previously predicted economic growth to be 3.1% and 2.5% for 2018 and 2019.

When asked about how he views recent market volatility, he said his focus is what's happening in the broader macroeconomy.

"We follow markets carefully but remember, from a macroeconomic standpoint, no one market is the single dominant indicator," he said.

The Fed also on Wednesday sent a dovish signal to investors, lowering their projections of how many rates they expect next year in their so-called "dot plot." The central bank now appears to be eyeing at least two more rate hikes in 2019. Only six FOMC participants expect there could be as many as three.

"We know that the economy may not be as kind to our forecasts next year as it was this year," Powell said.

In September, nine of the 16 policy makers forecast the Fed should raise rates three or more times next year, while seven officials estimated the economy would benefit from two hikes or less.

Powell has repeatedly tried to advise investors not to read too deeply into the Fed's economic forecasts, saying policymakers often don't have the ability to see that far into the future and decisions are formed based on data from markets, the economy and business contacts.

The US central bank has been trying to strike a balance between not moving too fast and risking shortening the economy's longest running expansion versus not moving too slowly and risking the economy overheating.

Instead, it has signaled a shift toward "data dependence," meaning going forward it will only become less clear just how fast the Fed plans to raise rates to keep the US economy from wobbling.

Even so, policy makers didn't go as far as expected in removing a commitment to gradually continue to raise rates next year -- a move the market anticipated could have come as early as December.

At their last meeting in November, Fed officials suggested potentially changing their post-meeting statement to remove mention of "further gradual increases" and reflecting their plans to rely more greatly on fresh economic data.

The potential pivot by the Fed prompted one Wall Street analyst, Goldman Sachs' chief US economist Jan Hatzius, to declare ahead of the meeting in a note to clients: "The end of gradual."

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 750432

Reported Deaths: 13764
CountyCasesDeaths
Marion1031991782
Lake556411007
Allen41662691
St. Joseph36974564
Hamilton36561417
Elkhart29390459
Tippecanoe22886225
Vanderburgh22549400
Porter19348325
Johnson18432388
Hendricks17608317
Clark13206193
Madison13139344
Vigo12608253
LaPorte12415221
Monroe12188175
Delaware10954198
Howard10285225
Kosciusko9619119
Hancock8562145
Bartholomew8164157
Warrick7856156
Floyd7781180
Grant7232179
Wayne7160201
Boone6939103
Morgan6746141
Dubois6214118
Marshall6208116
Cass6000109
Dearborn589578
Henry5895109
Noble580787
Jackson508975
Shelby500896
Lawrence4738122
Gibson444593
Clinton441455
Harrison441073
DeKalb439485
Montgomery436390
Whitley406343
Huntington402481
Steuben399759
Miami393169
Jasper387454
Knox375890
Putnam372160
Wabash360683
Ripley346970
Adams345355
Jefferson335785
White331553
Daviess3033100
Wells295181
Decatur289992
Greene286885
Fayette284864
Posey273835
LaGrange273072
Scott270156
Clay266448
Washington245234
Randolph244783
Jennings235349
Spencer234431
Starke227958
Fountain220348
Sullivan214343
Owen211658
Fulton202142
Jay200932
Carroll193420
Orange188155
Perry187137
Rush175826
Vermillion174644
Franklin170335
Tipton166146
Parke149316
Pike138234
Blackford136232
Pulaski120547
Newton113736
Brown104043
Crawford102316
Benton101414
Martin91615
Warren83815
Switzerland8118
Union72810
Ohio57811
Unassigned0420

Ohio Coronavirus Cases

Data is updated nightly.

Cases: 1108146

Reported Deaths: 20122
CountyCasesDeaths
Franklin1286421460
Cuyahoga1157382208
Hamilton813551248
Montgomery525311041
Summit48395999
Lucas43343818
Butler38951604
Stark33318929
Lorain25658504
Warren24580303
Mahoning22355603
Lake21166387
Clermont20111253
Delaware18841135
Licking16660222
Fairfield16570204
Trumbull16537482
Medina15603271
Greene15272247
Clark14233306
Wood13287198
Portage13242214
Allen11910239
Richland11601211
Miami10843224
Wayne9130222
Columbiana9029230
Muskingum8906135
Pickaway8658122
Tuscarawas8643248
Marion8641138
Erie8056164
Ashtabula7147179
Hancock6996132
Ross6943161
Geauga6834150
Scioto6534105
Belmont6155174
Union584549
Lawrence5726102
Jefferson5675158
Huron5544122
Sandusky5439125
Darke5415129
Seneca5347126
Washington5318109
Athens523660
Auglaize501887
Mercer487385
Shelby476595
Knox4570112
Madison444065
Ashland435597
Putnam4336103
Defiance432298
Fulton432072
Crawford4036110
Brown402461
Logan387577
Preble3848104
Clinton379166
Ottawa373581
Highland359665
Williams348078
Champaign344258
Guernsey324853
Jackson318154
Perry297350
Morrow291840
Fayette285450
Hardin274965
Henry273367
Holmes2699101
Coshocton268960
Van Wert247264
Adams243156
Pike242835
Gallia240750
Wyandot234556
Hocking220162
Carroll197148
Paulding176542
Meigs148240
Monroe136344
Noble136039
Harrison114138
Morgan109624
Vinton85517
Unassigned03
Fort Wayne
Mostly Cloudy
65° wxIcon
Hi: 90° Lo: 65°
Feels Like: 65°
Angola
Partly Cloudy
° wxIcon
Hi: 85° Lo: 63°
Feels Like: °
Huntington
Mostly Cloudy
65° wxIcon
Hi: 90° Lo: 66°
Feels Like: 65°
Decatur
Cloudy
65° wxIcon
Hi: 92° Lo: 69°
Feels Like: 65°
Van Wert
Cloudy
67° wxIcon
Hi: 91° Lo: 66°
Feels Like: 67°
Our next system brings us the potential for strong to severe thunderstorms on Friday.
WFFT Radar
WFFT Temperatures
WFFT National

Community Events