Fed will be 'patient' in rate hikes amid global growth woes

WASHINGTON — The Federal Reserve said Friday that in light of a slowing global economy and last year's financial market turmoil, the central bank intends to remain "patient" in determining when to make future changes in its benchmark interest rate.

The Fed's semi-annual report to Congress on monetary policy stood in contrast to its last report in July when it signaled that it was on track to keep raising rates at a gradual pace over the next two years.

The new report cites a range of risks to the economy that have developed over the last six months, as well as continued muted inflation as reasons to slow further hikes.

Many private economists believe the Fed may raise rates at most only one more time late this year. And some analysts are even forecasting that the next move will be a cut in rates as the Fed confronts a slowing economy this year.

At its last meeting in January, the Fed left rates unchanged at a level of 2.25 percent to 2.5 percent and signaled a major pivot away from steadily raising rates by declaring that it intended to be "patient" in deciding when to raise rates again.

Various Fed officials including Fed Chairman Jerome Powell have emphasized that change in speeches since the Jan. 29-30 meeting. Powell will testify on the Fed's Monetary Policy report before Senate and House committees next Tuesday and Wednesday.

The report noted the turbulence that hit markets in the final three months of last year. But unlike President Donald Trump, who tied falling stock prices to the Fed's rate hikes, the central bank cited other factors including Trump's trade policies.

"Financial market participants' appetite for risk deteriorated markedly in the latter part of last year amid investor concerns about downside risks to the growth outlook and rising trade tensions between the United States and Canada," the monetary report said.

The Fed's decision in January triggered a big rally in stock prices as investors grew less concerned that the Fed could over-do its tightening cycle and push the country into a recession.

The Fed had raised rates four times in 2018 and signaled in December that it expected to hike rates another two times in 2019.