June 18, 2024

Fed Holds Rates Steady Amid Uncertainty


Fed Holds Rates Steady Amid Uncertainty

As the United States rounds the corner into the new decade, the economy continues to churn. But even though the domestic markets are performing well, the global markets are being affected by political turmoil, potential pandemic, and varying delays and stoppages in the supply chains of some of the worlds largest companies. For this reason, the Federal Reserve has shifted into a wait-and-see approach after cutting rates three times in 2019.

Last year, the Federal Reserve vowed to stand firm on their rates barring a major economic change; in their meeting on Wednesday, it became apparent that they had done exactly that. Federal Reserve chair Jerome Powell maintained the institution’s rates in the 1.5%-1.75% range, a historically low number. On the topic of global markets in a frenzied world, he said;

“Uncertainties about the outlook remain, including those posed by the new coronavirus. There is likely to be some disruption to activity in China and globally.”

The Wuhan coronavirus, currently crippling the Chinese infrastructure and spurring panic worldwide, is disrupting many manufacturing industries in China. With nearly 80% of the manufacturing workforce either shut down or slowed by the spread of the virus, many international companies that rely on China for parts and labor have been affected by the troubles abroad.

The Federal Reserve Bank

Back on American soil, though, companies are trying to do the best they can with what they have. The Federal Reserve will continue with their purchasing Treasury bonds in an effort to create more liquid cash in the American financial system as uncertainties loom.