(Published January 30, 2019)

We are extremely delighted and relieved, in equal measure, that the Federal Reserve held its key interest rate steady today.

“The case for raising rates has weakened somewhat,” Fed Chairman Jerome Powell said at the post FOMC Meeting news conference. He also indicated that a “wait and see attitude with patience is warranted”.

“The U.S. economy is in a good place, and the current policy stance is appropriate” he said, but added there’s growing evidence of “crosscurrents,” such as slowing growth in China.

“In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments” to its key interest rate will be necessary. The central bank also indicated on Wednesday a greater willingness to keep its roughly $4 trillion portfolio of government bonds elevated to prevent long-term rates from rising if the economy falters. That marks a shift from its prior plan to steadily shrink its balance sheet.

We are also equally excited to note that the Fed indicated that Inflation would form a key part of future hikes strategic calculus. This leads us believe that the Fed has listened and changed course appropriately based on “events on the ground” in Wall Street and Main Street.

As you know, we have been advocating this course of action to slow down / stop the hikes, to let the markets stabilize from the free fall occurring in late fall (and during the previous months), and not be influenced by political and other considerations.

Hence, we laud the Fed and totally concur with their new avatar manifested by a more data driven, cautious and market friendly approach.