Federal Reserve officials were mostly optimistic about the U.S. and global economies last month, though they noted the risk posed by China’s viral outbreak and said they were ready to keep their benchmark interest rate at its current low level in the coming months.
Fed policymakers observed at their Jan. 28-29 meeting that risks to the U.S. economy had faded since their previous meeting in December, according to. The Trump administration had reached a preliminary trade agreement with China, and Congress approved an updated trade pact with Canada and Mexico.
Many Fed watchers have interpreted that caution as a signal that the Fed’s next move, whenever it occurs, is more likely to be a cut rather than a hike. Traders are now betting that the odds of a cut by year’s end are at 85%.The minutes of the Fed’s meeting showed that officials were ready to keep short-term rates at a range of 1.5% to 1.75% for the foreseeable future. Rates at that level would help the U.S.
Stock prices, which had risen before the Fed minutes were released at 11 a.m. Pacific time, rose higher afterward. The Dow Jones industrial average was up about 150 points in mid-afternoon trading. At last month’s policy meeting, several officials sought to highlight the Fed’s determination to raise inflation back to its 2% target level. These officials “stressed that the [Fed] should be more explicit about the need to achieve its inflation goal on a sustained basis.”
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