The Federal Reserve announced Wednesday it would not make any change to the current interest rate, despite multiple exhortations from President Donald Trump that the central bank should slash rates in order to support the nation's almost decadelong economic expansion.
Fed officials voted 9-1 to keep the benchmark lending rate at between 2.25 percent and 2.5 percent, where it has been since December 2018. The Fed has not cut interest rates in more than a decade.
Wall Street spiked when the announcement was made at 2 p.m. ET, after what had been a mostly flat day of trading ahead of the highly anticipated decision.
Wednesday's statement, which came at the conclusion of the Federal Open Market Committee's two-day June monetary policy meeting, also included modified language that pleased investors. Market watchers had been hoping the Fed would signal a “readiness” to act in the future. The official Fed statement said "uncertainties had increased" and that it would "act as appropriate to sustain the expansion."
However, there was little uniformity within the central bank as to when a rate cut would be implemented, with eight of the 17 members favoring one rate cut this year, eight wanting no further cuts, and one official supporting a rate increase before the end of 2019.
"Despite the turbulent news cycle and the similarly uneven performance from the stock market over the past few months, the reality is that the economy is still in fighting shape," Steve Rick, chief economist at CUNA Mutual Group, said. "Overall, although we’re experiencing a little more pressure now than we were a year ago, the economy has been running red-hot for a long time. The risks of higher inflation and an overheating economy are still very much on the table" and could tip the economy into a recession by 2020, he said.