WASHINGTON -- The Federal Reserve sees an ongoing slowdown in the U.S. economy and will maintain patience about raising interest rates, according to a summary of the central bank's most recent meeting on Jan. 29-30.
The Fed is accommodating a shift in economic growth, which is expected to slow from about 3 percent last year to 2.3 percent this year.
"The Fed may be getting this right," said Michael Farr, a Washington investor. It "may be pausing without having killed the expansion and bull market and without causing a recession."
The central bank this year will stop shrinking the $4 trillion in Treasuries and other assets that the central bank accumulated as part of its rescue of the U.S. economy after the financial crisis.
"Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve's asset holdings later this year," according to the Fed release Wednesday afternoon.
The central bank started unwinding its asset portfolio in 2017. Some think its shrinking portfolio -- a "runoff" -- contributed to the stock sell-off in late 2018.
"There are strong hints that the Fed is zoning in on ending balance sheet normalization later this year," said James Ong, senior macro strategist at Invesco Fixed Income.
The Dow Jones industrial average wobbled into negative territory immediately after the Fed's release on Wednesday, but it then regained some upward momentum.
Some analysts said the minutes show the Fed is keeping its powder dry.
"The much-ballyhooed term 'patient' was used to buy the Fed some time to assess how risks to the economy unfold before deciding on their next move," said Greg McBride, chief financial analyst at Bankrate.com. "If the economy remains in good shape, we haven't necessarily seen the last of the interest rate hikes."
The central bank is closely watched because the interest rates it sets have a broad effect on the U.S. economy, influencing everything from stock and bond prices to mortgages, car loans and credit card interest.
The Fed had been heavily criticized by President Donald Trump for raising interest rates last year, which the president blamed for tanking the stock market in the final months of 2018. Trump has closely tied the success of his presidency to the performance of U.S. stocks.
The market began a volatile period beginning with Chairman Jerome Powell's interview on PBS on Oct. 3, when he said "we're a long way" from a halt in interest rate increases.
Those statements helped spur a sell-off that was aggravated by computer trading and ended with the worst Christmas Eve stock crash in decades and the poorest December performance since the Great Depression.
Wall Street and Trump accused Powell of being too aggressive and of not being attuned to the economy.
Powell backed off in late January when the central bank opted to leave interest rates unchanged -- at a range of 2.25 percent to 2.5 percent -- and signalled a halt to increases and more close attention to the economy.
Business on 02/21/2019