FOMC Holds Fed Funds Rate at 2.25 to 2.50 percent

By Mark Lieberman

Managing Director and Senior Economist


  • FOMC leaves target Fed Fund rate unchanged at 2.25-2,50 percent


  • The target Fed Funds rate was set at the current level last December;
  • The rate was set at 1.50 – toe 1.75 percent in March 2018.
  • After holding rates at near zero from December 2008 through December 15, the FOMC has raised the target rate nine times.

Source: Federal Open Market Committee

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The Federal Open Market Committee made no change in interest rates Wednesday at the conclusion of its two-day meeting. The target for the rate banks charge each other for overnight borrowing remained at 2.25 – 2.5 percent.

The FOMC voted 9-1 with St. Louis Fed President James Bullard casting the lone dissenting vote. Bullard, according to the end-of-meeting statement issued by the committee, “preferred…to lower the target range for the federal funds rate by 25 basis points.”

The FOMC and its chair, Jerome Powell, has been under pressure from President Trump to lower rates to stimulate the economy. That pressure increased after the Bureau of Labor Statistics reported earlier this month the economy added a disappointing 75,000 jobs in May, far below its recent three-month average of twice that. Negative revisions for the March and April job counts subtracted a combined 75,000 jobs from the gains recently reported for those months, so the May net job gains were zero.

Nonetheless, the FOMC said “job gains have been solid, on average, in recent months” and noted “on a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent.” The FOMC has been trying to maintain inflation at two percent.

The FOMC action means no change in the prime interest rate which is used as the basis for home equity lines of credit and auto loans.

In their quarterly economic projections, the Fed forecast slower growth for the economy overall predicting GDP growth would be 2.1 percent this year falling to 2.0 percent next year and 1.8 percent in 2021. The forecast was virtually unchanged from the projections offered three months ago.

At the same time, the forecast anticipated a slight increase in the unemployment rate from the current 3.6 percent to 3.8 percent by 202, slightly more optimistic than the forecasts issued in March.

The next scheduled FOMC meeting is set for July 30-31.

You can hear Mark Lieberman every Friday at 6:20 am on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

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