By Heather Long
Janet L. Yellen, chair of the Federal Reserve, is stepping down as the central bank’s leader. (Andrew Harrer/Bloomberg)
The Federal Reserve voted unanimously Wednesday to keep interest rates unchanged at 1.25 to 1.5 percent. The move was widely expected as the Fed didn’t want to rile markets this week as Fed Chair Janet L. Yellen steps down and Jerome H. Powell, President Trump’s pick, takes over the reins of the central bank. Powell is set to be sworn in Monday at 9 a.m.
The change in leadership at the central bank is taking place at a time of strength for the U.S. and global economies, which should help ensure a smooth transition. In a statement, the Fed praised the “solid” gains in hiring, household spending and business investment. Unemployment is at a 17-year low, growth has picked up in recent months, and inflation has remained low. Perhaps the only concern is a stock market that keeps hitting record highs, but the Fed has said its main focus is the health of the wider economy, not daily market moves.
The Fed is strongly hinting that it is likely to hike interest rates at its next meeting in March. The committee that sets interest rates went out of its way to say that it expects inflation to hit — or at least come very close — to the Fed’s 2 percent target this year. Persistently low inflation has been the main stumbling block holding the Fed back from faster rate hikes.
“Inflation on a 12-month basis is expected to move up this year and to stabilize around the Committee’s 2 percent objective over the medium term,” the Fed wrote in its statement. There was no news conference after this meeting for the Fed to explain its thinking further.
The Fed projects three rate hikes this year.