(December 19 – 14:45 ET) – The U.S. Federal Reserve Board has left interest rates unchanged, but suggested it may lower rates in the near future.

Stocks rallied today in hopes of a rate cut, and are selling off in the wake of this announcement.

In its accompanying policy statement, the Fed laid out its position, “The drag on demand and profits from rising energy costs, as well as eroding consumer confidence, reports of substantial shortfalls in sales and earnings, and stress in some segments of the financial markets suggest that economic growth may be slowing further. While some inflation risks persist, they are diminished by the more moderate pace of economic activity and by the absence of any indication that longer-term inflation expectations have increased.”

The Fed indicated that its next move is to likely lower rates to fend of a possible recession. “Against the background of its long-run goals of price stability and sustainable economic growth and of the information currently available, the committee consequently believes that the risks are weighted mainly toward conditions that may generate economic weakness in the foreseeable future.”
-IE Staff