WASHINGTON — Federal Reserve officials left interest rates unchanged at their first meeting of 2020 on Wednesday, upholding their patient stance after an active, and often tumultuous, 2019.
The Fed continued to express confidence about the economy’s health in its post-meeting statement, saying “the labor market remains strong” and economic activity has been rising “at a moderate rate. Job gains have been solid.”
Officials offered few hints at what could shake them from their wait-and-see approach, updating only a handful of words from their December statement. The pace of household spending was downgraded from “strong” to “moderate,” and the committee judged that its current policy setting would help to support inflation “returning to” its 2 percent goal. Previously, it had stated that inflation was “near” that target.
Officials ultimately cut borrowing costs three times last year as trade tensions and slowing global growth weighed on the economic outlook. The move marked a full pivot from 2018, when the Fed was steadily raising rates to fend off higher inflation as unemployment sank steadily lower.
But Chair Jerome H. Powell has signaled that the central bank does not plan to cut interest rates as long as the growth outlook shapes up as it is expected, and does not intend to raise them unless inflation moves up and stay there. The federal funds rate is currently set in a 1.5 to 1.75 percent range.
The Fed is trying to stay nimble as growth chugs along but price gains remain subdued. But President Trump does not appear to welcome that approach.
Mr. Trump has been pushing the central bank to slash rates further and, in a tweet on Tuesday, said that “the Fed should get smart & lower the Rate,” arguing that comparatively high rates in the United States are putting the country at a disadvantage.
The central bank does not answer to the White House, and officials regularly reiterate that they set a policy with an eye toward their twin goals — maximum employment and stable inflation.
Yet officials are facing a conflicting backdrop when it comes to achieving those targets.
Hopes of a global growth turnaround had been climbing, helped along by an initial trade deal with China. Mr. Trump also signed a revised North American Free Trade Agreement on Wednesday, bringing more than two years of fraught negotiations to a close.
But those positive signs could be dampened by the outbreak of a new coronavirus that is forcing quarantines in China and causing nervousness around the world.
And while employers are still hiring and unemployment remains at a half-century low, inflation continues to miss the Fed’s 2 percent target, which it has not hit sustainably since the central bank formally adopted the goal in 2012.
Tepid inflation leaves the central bank with less headroom to cut rates — which include price increases — in a downturn. And if consumers begin to expect slower increases, that outlook could become self-fulfilling, dragging price gains down further. Hardly anyone — including Fed officials themselves — expects it to eclipse 2 percent this year.
Mr. Powell is scheduled to speak at a 2:30 news conference.