Federal Reserve policymakers voted to leave interest rates unchanged at their policy setting meeting today after months of speculation and nervousness on Wall Street and beyond that the era of low interest rates was coming to a close.
â€œRecent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near-term,â€ the Fed said in a statement, adding that itâ€™s â€œmonitoring developments abroad.â€
â€œThere was a 50/50 chance the Fed was going to raise rates, and they didnâ€™t,â€ said Art Hogan, managing director and chief market strategist at Wunderlich Securities. â€œWhatâ€™s new is that they mentioned a global economic slowdown, which essentially means that they’re more concerned about China than theyâ€™ve been in the past and the implications for a slowdown there,â€ he adds.
While Hogan points out that the Fed did leave the door open for a rate hike at their next policy setting meeting in December, some analysts think the Fed should tread carefully until the economy in the U.S. is on more solid ground.
â€œTodayâ€™s decision by the Federal Reserve to keep short-term rates unchanged is welcome. The data clearly indicate that much slack remains in the economy and inflation is not a danger the Fed needs to be worried about right now. We hope they continue their pragmatic, data-based approach and allow unemployment to keep moving lower, and only tighten after there is a significant and durable increase in inflation,â€ said Josh Bivens, research and policy director at the Economic Policy Institute. “Tightening before the economy has reached genuine full-employment is not just a mistake, itâ€™s a regressive mistake that would hurt the most vulnerable workers—low-wage earners and workers from communities of color—the most.â€
Congresswoman Maxine Waters, (D-CA), and ranking member of the Committee on Financial Services echoed those sentiments.Â Â “Moving to prematurely raise rates will endanger the critical economic progress we have made, and threaten any gains minorities have only begun to make on the tail end of this recovery.”