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: 318894

Reported Deaths: 5561
CountyCasesDeaths
Marion43391855
Lake27599462
Allen18363299
Elkhart17474226
St. Joseph17071234
Hamilton13376169
Vanderburgh9839121
Tippecanoe880629
Porter844886
Johnson6556169
Hendricks6267158
Vigo618187
Monroe542850
Clark522877
Madison5153122
Delaware5014103
LaPorte474695
Kosciusko468540
Howard357977
Warrick329872
Floyd324978
Bartholomew323563
Wayne318074
Marshall308146
Cass302631
Grant282050
Noble261546
Hancock260355
Henry252837
Boone248754
Dubois242931
Dearborn222631
Jackson222534
Morgan215543
Knox189720
Shelby189556
Gibson189426
Clinton182121
DeKalb181632
Lawrence179748
Adams171022
Wabash168121
Miami166614
Daviess160144
Steuben150713
Fayette150034
Jasper147413
Montgomery146627
Harrison145524
LaGrange145031
Whitley140814
Ripley138515
Huntington130910
Decatur128243
Wells127930
Putnam127828
White127522
Clay126523
Randolph126121
Posey124116
Jefferson122916
Scott112320
Greene104653
Jay100713
Sullivan99216
Starke94021
Jennings88714
Fulton86419
Spencer8588
Perry83721
Fountain8078
Washington7837
Franklin71327
Carroll69613
Orange69028
Vermillion6444
Owen6317
Tipton58927
Parke5886
Newton56912
Rush5658
Blackford54012
Pike51619
Pulaski41115
Martin3645
Benton3553
Brown3514
Crawford3031
Union2752
Switzerland2605
Warren2542
Ohio2337
Unassigned0266

Ohio Coronavirus Cases

Data is updated nightly.

Cases: 382743

Reported Deaths: 6274
CountyCasesDeaths
Franklin51161671
Cuyahoga37222743
Hamilton30493372
Montgomery20518236
Butler15199148
Lucas14566417
Summit13933327
Stark9193206
Warren841976
Mahoning7530300
Lake710067
Lorain6690106
Clermont593651
Delaware572537
Licking564577
Trumbull5584147
Fairfield554464
Greene538066
Clark5218101
Allen494989
Marion476759
Medina471657
Wood4598107
Miami437568
Pickaway404048
Portage358972
Columbiana357698
Tuscarawas342667
Richland328539
Wayne327394
Mercer296047
Muskingum252510
Hancock245940
Ross244559
Auglaize236435
Darke232560
Erie230268
Putnam229449
Ashtabula228354
Geauga211851
Scioto200616
Union19668
Shelby194017
Lawrence193039
Athens19134
Seneca182919
Belmont170229
Madison163119
Sandusky157729
Preble156521
Huron155519
Defiance144823
Holmes140439
Logan133517
Knox131718
Fulton128726
Jefferson128613
Crawford126817
Washington125227
Ottawa124530
Clinton109115
Williams10799
Ashland107825
Highland103718
Brown10135
Henry101323
Hardin99719
Champaign9825
Van Wert97318
Jackson96212
Fayette92717
Morrow9202
Guernsey89314
Coshocton85215
Perry82912
Adams80313
Pike7661
Gallia76513
Wyandot73217
Paulding66511
Hocking64516
Noble62224
Carroll48810
Meigs39612
Monroe32321
Morgan2685
Vinton2246
Harrison2193
Unassigned00
Fort Wayne
Overcast
45° wxIcon
Hi: 46° Lo: 28°
Feels Like: 41°
Angola
Overcast
43° wxIcon
Hi: 45° Lo: 28°
Feels Like: 38°
Huntington
Overcast
45° wxIcon
Hi: 46° Lo: 27°
Feels Like: 42°
Decatur
Broken Clouds
45° wxIcon
Hi: 46° Lo: 29°
Feels Like: 42°
Van Wert
Broken Clouds
45° wxIcon
Hi: 46° Lo: 29°
Feels Like: 42°
Mostly Cloudy Black Friday
WFFT Radar
WFFT Temperatures
WFFT National

Community Events