The Federal Reserve on Wednesday left interest rates unchanged, thwarting expectations of an interest rate cut.
Although the FOMC has been hinting at rate cuts since last month, it decided to leave rates unchanged after considering economic indicators and data from all 50 states.
This decision comes in the wake of recent economic turmoil across the globe, including an escalating trade war between the U.S. and China, and Britain’s looming exit from the European Union.
The decision may have been expected by most, but it has far-reaching implications for the U.S. economy.
The effect of the unchanged rate may be more positive than negative. By keeping the rate steady, the Federal Reserve isn’t necessarily adding fuel to an already fragile economy. It’s likely that further decreases in the already low Federal funds rate could be counter-productive and lead to a recession.
For consumers, both lending and borrowing will be affected by the Federal Reserve’s decision to keep the interest rate unchanged. Credit card rates and mortgage rates won’t be impacted, but those looking to borrow money using personal loans or other forms of consumer debt could see a difference.
By maintaining current interest rates, the Federal Reserve has ensured stability in the markets. Without further disrupting the already volatile economic environment, the Fed has given economic actors time to adjust and act accordingly according to the current set of conditions.
The Federal Reserve will meet again in mid-July to review its monetary policy decision. Whether or not the Fed decides to cut interest rates then remains to be seen. Until then, it’s the job of all economic actors to remain vigilant and prepare for any future changes.