The Federal Reserve has decided not to hike interest rates for the first quarter of 2019. Instead, it will leave rates unchanged at a rate of 2.25 percent to 2.5 percent. it also said that it would be "patient" about adding more rates in the future. Last year, the Fed had predicted that there would be two more rate hikes in 2019.
Here's what we know
In a news release announcing the decision, the Fed explained its reasoning:
Job gains have been strong, on average, in recent months, and the unemployment rate has remained low. Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier last year. On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent. Although market-based measures of inflation compensation have moved lower in recent months, survey-based measures of longer-term inflation expectations are little changed.
The Federal Reserve also said that "[i]n light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes."
In a news conference announcing the decision, Federal Reserve Chair Jerome Powell said that the case for any additional rate hikes "has weakened."
Economists have said the announcement is a signal that the Fed "intends to take a cautious approach in an uncertain economic environment," CNN reported.
Following this announcement, the Dow Jones Industrial Average rose more than 400 points.
The Fed raises interest rates as the U.S. economy strengthens, in an effort to prevent inflation from getting out of control.
In 2018, the Federal Reserve hiked interest rates four times: in March, June, September, and December.
President Donald Trump said in July that he was "not happy" that the Fed had chosen to raise interest rates the month before.
On Jan. 4, Powell told Reuters that despite the criticism, he had no plans to resign and had not been asked to.
In a statement from July, the White House insisted that "the president respects the independence of the Fed" and that he was "not interfering with Fed policy decisions."