Fed To Keep Rates Steady — For Now

Interest rates will remain steady, according to a new statement from the Federal Open Market Committee, despite an improved economic outlook from the public.

In other words, the Federal Reserve will keeps its target for the federal funds rate between 0.5 percent and 0.75 percent. Back in December, officials raised the rate a quarter of a point, which at the time was only the second hike since the Great Recession.

Economic confidence from both consumers and businesses has risen since the November election.

Generally a such a surge in optimism would lead the Fed to raise rates; its hesitance suggests officials want to wait and see how the long the confidence lasts.

Chief Financial Analyst Greg McBride at Bankrate.com suggested that the Fed's decision may also reflect caution in the wake of unknown policy changes coming from President Trump and the new Republican control of the federal government.

“The Fed made no reference to the uncertainty surrounding upcoming fiscal policy changes, choosing to remain above the political fray," McBride said. "But the Fed will have a difficult time raising interest rates further as long as there is guesswork about what the fiscal stimulus will look like.”

Photo credit: Federal Reserve