The Federal Reserve announced Wednesday that it would not change its interest rate target, following a meeting overshadowed by the expectation that President Trump will announce a replacement for Chairwoman Janet Yellen on Thursday.
Trump is expected to pick one of Yellen’s current subordinates, Fed governor Jerome Powell, to replace her.
The central bank’s monetary policy committee voted Wednesday to maintain a short-term interest rate target of between 1 percent and 1.25 percent. And, as expected, the statement contained positive language about the economic forecast, reinforcing investors’ expectations that the Fed will institute a quarter-percentage point rate increase in December as part of its gradual move to tighten monetary policy in response to economic improvement.
The group stated that “economic activity has been rising at a solid rate despite hurricane-related disruptions.”
That cautious, pre-planned campaign to raise interest rates toward historical norms and withdraw emergency stimulus measures would be Powell’s to inherit if he does replace Yellen at the end of her term in February.
Yellen and other Fed officials generally see the economy as healthy and gaining strength. At 4.2 percent in September, the unemployment rate was lower than any time since early 2001.
Stock market indices, too, have risen to new heights, a development that Trump has said influenced him to consider keeping Yellen at the Fed. While serving alongside Yellen, Powell has supported her policies.
