U.S. Fed holds rate steady amidst strong economic data

August 1, 2018 Edward Golding

 

Blog image

Today, members of the Federal Open Market Committee voted unanimously to hold the target range of the federal funds rate steady at 1.75% to 2.00%. Interest rates remain accommodative in the midst of strong labour market data and solid growth in economic activity.

In its announcement, the Fed pointed out that “economic activity has been rising at a strong rate” driven in part by growth in both household spending and business investment. At the same time, inflation remains on target, with overall inflation and inflation minus food and energy remaining near 2%, in line with expectations.

The Fed remains on track for further, gradual interest rate increases in line with sustained economic expansion and strong labour markets, so long as inflation remains near the 2% target range. Risks to the economic outlook appear to be “roughly balanced” and the timing and size of future rate adjustments will be based on realized and expected economic conditions relative to the Fed’s maximum employment and 2% inflation objectives going forward.

While the Fed was largely expected to hold the rate steady, both the S&P 500 and U.S. bond yields dropped slightly in the wake of the announcement, with the equity index recovering shortly after. The U.S. dollar also moved slightly lower relative to the Canadian dollar and most other major currencies following the announcement.

About the Author

Edward Golding

Edward Golding, CFA, MBA, is an Assistant Vice President with the Investment Management and Strategy team at MD Financial Management. He oversees the Canadian, Dividend and U.S. equity mutual funds and investment pools at the firm.

More Content by Edward Golding
Previous Article
On the plus side. . . good news in today’s markets
On the plus side. . . good news in today’s markets

In the week following Facebook’s historic stock shock that wiped out US$150 billion of market value, we’ve ...

Next Article
You can still friend me, but I won’t risk an earnings miss
You can still friend me, but I won’t risk an earnings miss

I get asked lots of questions from friends and family about stocks and investing in certain companies. Typ...

×

Subscribe to our Newsletter

I allow MD Financial Management (including MD Financial Management Inc., MD Management Limited, MD Private Trust Company MD Life Insurance Company and MD Insurance Agency Limited), the Bank of Nova Scotia and other members of the Scotiabank group of companies (“Scotiabank Members”) to send me electronic messages (such as emails and SMS text) about their products and services, offers, events, and other valuable information as well as information about the products and services of other Scotiabank trusted partners that may be of interest to me.  This consent is being sought on behalf of each MD Financial Management and Scotiabank Member which includes any company(ies) or person(s) that form a part of the Scotiabank group of companies in the future. View the MD Privacy Policy here:
!
Thank you!
Error - something went wrong!