Fed Keeps Rates Unchanged In Anticipation Of Trump Policy

Dated: 02/03/2017

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The Federal Reserve kept the key interest rate unchanged this week as it looks to future fiscal policy under the new administration—a decision in line with its intent to raise rates only gradually in 2017.

“In view of realized and expected labor market conditions and inflation, the [Federal Open Market] Committee decided to maintain the target range for the federal funds rate at 1/2 to 3/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a return to 2 percent inflation,” according to a statement by the Fed.

Approximately half of Americans recently surveyed by Bankrate are concerned about rising interest rates in the months to come. A higher key rate precedes higher mortgage rates; according to realtor.com®, the proportion of first-time homebuyers who plan to enter the housing market this spring has fallen 10 percent since the election due to higher mortgage rates.

The Fed expects to raise the key rate three times in 2017, but the current consensus among analysts is that the rate will not rise until June. The Fed raised the key rate once in 2016, one-quarter percentage point, in December.

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