FOMC Statement: Key Fed Rate Unchanged; Policymakers Monitor Impact of Asian Flu Outbreak
The Federal Open Market Committee of the Federal Reserve issued its scheduled post-meeting statement Wednesday. Policymakers unanimously decided to leave the target federal funds rate range unchanged at 1.50 to 1.75 percent.
FOMC members reasserted previous views that inflation was “subdued” and the economy was growing at a moderate pace. The Fed typically bases decisions about interest rates on its dual mandate of achieving maximum employment and an annual inflation rate of 2.00 percent.
U.S. Economy Strong, Fed Chair Sees No Immediate Risk From China
FOMC cut the target interest rate range three times in 2019 to offset higher prices associated with a trade war with China, but the Committee considered recent progress in trade negotiations as an indication that there was no current need for further rate cuts. Fed Chair Jerome Powell said he was not concerned about immediate risks from China.
In its current assessment of economic conditions, the Fed cited a strong labor market and job growth but said that business investments and exports were weak. Core inflation readings, which exclude volatile food and fuel sectors, consistently ran below 2.00 percent. The FOMC changed language in its statement to indicate a goal of achieving an inflation rate of 2.00 percent; previous statements referred to an inflation goal of near 2.00 percent.
Committee members will continue to monitor current and developing economic conditions to determine when or if to change the benchmark interest rate range in future meetings.
Fed Chair: Fed Is Monitoring Potential Impact Of Coronavirus Outbreak
Concerns over trade conflicts with China were overshadowed by an outbreak of a strain of Asian influenza in China. The disease, caused by a coronavirus, is extremely contagious and spreads quickly. This could impact global economic conditions as international air travel and shipping may be limited or stopped to prevent further spread of the virus.
Fed Chair Jerome Powell said that although the Fed is not worried about an immediate threat, the FOMC members would continue to monitor how and where the current outbreak of Asian influenza spreads to determine if changes to the Fed’s monetary policy positions are necessary. Tensions in the Middle East were not mentioned in the FOMC statement or Fed Chair Jerome Powell’s post-meeting statement.
According to a report that was recently published by the United States Census Bureau, the average mortgage payment has been dropping. According to the bureau, the average payment is just over $1,500 per month. This is shockingly close to the average cost of renting, which is just under $1,500 per month. 
Case-Shiller Home Price Indices reported that national growth of home prices rose by 0.30 percent in November. Analysts said that slim inventories of available homes boosted home prices. Whether or not home price growth continues gaining speed depends on variables including supplies of homes for sale, affordability and home-buyer confidence in the economy.
For many people, owning a home is seen as a rite of passage. At the same time, purchasing a home is expensive. As a result, many people end up renting for an extended period of time.
Last week’s economic reporting was slim due to the observance of the Martin Luther King Jr. holiday. The National Association of Realtors® reported on sales of previously owned homes and the Veterans Administration announced changes to its home loan programs. Weekly reports on mortgage rates and initial unemployment claims were also released.