WASHINGTON – Federal Reserve Chairman Jerome Powell said Wednesday that he does not anticipate any interest rate hikes this year.
“We believe that our current policy stance is appropriate,” Powell said at a news conference following a Federal Open Market Committee meeting.
Powell said the committee voted to keep rates at 2.25-2.5 percent.
In January the Fed said two rate hikes were possible this year due to a slight slowdown in economic growth. The economy grew at 3.1 percent in 2018. The Fed originally predicted the economy would grow at 2.3 percent this year but now predicts 2.1 percent growth.
“The U.S. economy is in a good place, and we will continue to use our monetary policy tools to keep it there,” he explained.
The Fed has historically kept interest rates low when the economy is sluggish to encourage borrowing. The Fed has historically raised interest rates when the economy is strong so as to keep pace with inflation.
When rates are high, borrowing money is more expensive. When rates are low, borrowing money is cheaper.
The Fed’s announcement did little to boost market confidence.
As of 3:45 p.m. EDT, all three major stock indexes were down except the NASDAQ, which had risen 11 points from its opening.