By Isaac Cohen*
The first meeting of the Federal Reserve Open Market Committee under the new Chairman Jerome Powell announced, on March 21, the expected first increase of the year in the target range for the federal funds rate, to between 1.50 and 1.75 percent. This was seen as a sign of continuity with the policy stance observed during the tenure of the previous Chair Janet Yellen. However, the last statement revealed a slight change in the perception of the level of economic activity, describing it as “rising at a moderate rate,” instead of “rising at a solid rate,” as described after the two previous meetings of last December and January.
Additionally, indicating moderate optimism, upward revisions were issued of the growth projections, to 2.7 percent this year, from 2.5 percent and 2.4 percent in 2019, from 2.1 percent. Still, central bank projections are a bit less optimistic than the White House expectation of over 3 percent growth rates.
As described by Chairman Jerome Powell, the central bank policy posture is placed in the middle ground between raising rates too much or too slowly. In his own terms, “we’re trying to take the middle ground, and the committee continues to believe that the middle ground consists of further gradual increases in the federal funds rate.”
*International analyst and consultant, former Director ECLAC Washington Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.
