US Federal Reserve holds first monetary policy meeting for 2019

The US Federal Reserve will meet for the first time in 2019 today. In mid-December, the central bank raised interest rates by 25 basis points from 2.25% to 2.50%; another hike is not expected until mid-year.

According to analysis by the Federal Reserve Bank of St. Louis, America’s economy grew by more 3% last year—the highest headline rate since 2005—while unemployment remains at an extremely low 4%. However, such a low unemployment rate could become problematic if companies struggle to fill jobs, leading to wage-driven inflation.

While economists expect inflationary pressures to hold steady at 2%, which is within the Federal Reserve’s target, the Fed plans to raise interest rates “three or four more times” in 2019. These increases are expected later in the year, with many expecting the first hike to come in June.

The Fed has emphasised flexibility in informal statements thus far in 2019, and without published economic data from the fourth quarter of 2018 due to the recent government shutdown, today’s meeting is likely to produce a dovish statement and no rate hikes.

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