Federal Reserve legislators had been cautiously optimistic about their ability to carry rates of interest steady this year, minutes of the central bank’s final policy assembly showed, even as they acknowledged new threats brought on by the coronavirus epidemic.
The readout Wednesday of the policy talks, at which policymakers collectively voted to keep rates of interest fixed in a target range of between 1.50% and 1.75%, also confirmed Fed delegates had been skeptical about any big rethink of the central bank’s inflation objective.
Coming into this year, the Federal Reserve had made clear that, after three rates of interest reductions last year, it plans to hold rates of interest steady, barring a significant change in the U.S. economic scope.
Policymakers have pointed to U.S. consumer spending ranges, dissipating U.S-China trade tensions and loose economic conditions as supporting their view; however, how long such an upbeat evaluation can last has already been tested by the escalating concern in regards to the global economic influence of the coronavirus epidemic that stemmed in China.
On Monday, Apple issued a revenue warning because of the disruption the pandemic is inflicting to its supply chain. China, the world’s second-largest economic system, is still struggling to get its manufacturing sector back up and operating after imposing travel restrictions to curb the coronavirus.
Fed Chairperson Jerome Powell stated last week it was too early to inform if the knock-on economic impact on the U.S. could be severe enough to trigger the Fed to change its existing route.
In spite of that, Fed executives offered an upbeat review of the economy, anticipating consumer spending to “likely remain on a stable footing,” job gains to increase at a robust pace, continued moderate economic growth, and inflation returning to its 2% goal.