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Fed Drops the Word 'Patient' From Its Statement

Some say that could suggest the Fed is now inclined to begin cutting rates
By Newser Editors and Wire Services
Posted Jun 19, 2019 1:49 PM CDT
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In this June 2, 2019, file photo Federal Reserve Chairman Jerome Powell speaks at a conference involving its review of its interest-rate policy strategy and communications in Chicago.   (AP Photo/Kiichiro Sato, File)

(Newser) – The Federal Reserve left its key interest rate unchanged Wednesday but signaled that it's prepared to start cutting rates if needed to protect the US economy from trade conflicts and other threats. The Fed kept its benchmark rate—which influences many consumer and business loans—in a range of 2.25% to 2.5%, where it's been since December. It issued a statement saying that because "uncertainties" have increased, it would "act as appropriate to sustain the expansion." That language echoed a remark that Chairman Jerome Powell made two weeks ago that analysts interpreted as a signal that rate cuts were on the way. In its statement Wednesday, the Fed removed a reference to being "patient" about adjusting rates. The AP sees that as suggesting that the Fed is now inclined to begin cutting rates for the first time in more than a decade.

A survey of the 17 Fed officials showed that nearly half now expect at least one rate cut this year, with seven projecting two cuts. When they met in March, no officials had forecast a rate cut. But CNBC is less optimistic when it comes to the timing of any cuts, saying the Fed "indicated no cuts" are coming this year but anticipates one or two in 2020. The Wall Street Journal saw "hints" of a potential cut in the upcoming months. Many Fed watchers have said they think the policymakers want to first see whether a meeting that President Trump and Xi Jinping are to hold late next week produces any breakthrough in the US-China trade war. But economists say when—or even whether—the Fed eases credit will depend on a host of factors including Trump's trade wars, the job market, and inflation.

(Read more Federal Reserve stories.)

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