An increasingly transparent Federal Reserve did the expected earlier this afternoon and the stock market yawned. On point, the lead bank's FOMC meeting voted unanimously to keep the federal funds rate target unchanged at 2.25%. This was the penultimate Fed meeting of this year, with one more get together scheduled for next month.
At this time, the overwhelming expectation is that the Fed will vote in a fourth rate increase when it gathers in December. In other news on this front, the Committee noted that the unemployment rate had declined since the September FOMC meeting, coming in at 3.7% in its latest survey covering October.
In all, the jobless rate has not been this low since 1969. Also, the Committee noted that the growth in business fixed investment had moderated from the rapid pace seen earlier in the year. The trade standoff with China may have been a factor in this deceleration. Even so, the Fed acknowledged that the rate of business activity remained strong, overall.
As to the longer-term outlook, the Fed has hinted that it sees three rate hikes in 2019--a number that the stock market may not have completely factored in. As to today's activity on the trading floor, stocks did little initially, but settled in somewhat lower as we past the first half hour after the 2:00 PM (EST) meeting.
- Harvey S. Katz, CFA
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
