FED Interest Rate Decision 1/29/20 - Forex News by FX Leaders
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FED Interest Rate Decision 1/29/20

Posted Wednesday, January 29, 2020 by
Shain Vernier • 1 min read

In what has been a somewhat strong day for the U.S. markets, the FED has released its first Interest Rate Decision of 2020. The Federal Funds Rate is to be held between 1.50% and 1.75% for the immediate future. This announcement comes on the heels of a solid January for equities, but heightened coronavirus and impeachment uncertainties.

FED Holds Rates Steady To Begin 2020

Today’s decision came as little surprise to those involved in the markets. Most analysts expect interest rates to be held firm at least until September. In fact, the CME FEDWatch Index is assigning a better than 50% probability to this scenario. If these projections are accurate, this afternoon’s FOMC vote may become routine. 

Below is a brief look at today’s highlights:

  • The FOMC voted unanimously to hold the Federal Funds Target Rate steady at 1.50% to 1.75%.
  • The FED did raise a special interbank lending rate known as the IOER to 1.6% from 1.55%. This move is to promote liquidity and a smooth function of the credit markets.
  • “The U.S. economy continues to grow at a moderate rate.”
  • “Job gains have been solid and unemployment has remained low.”
  • “On a 12-month basis, overall inflation and core inflation are running below 2%.”

Bottom Line: Today’s FED announcements went as expected. Aside from the IOER being hiked by 0.05%, it was business-as-usual. For now, the FOMC says that policy is “appropriate,” “data-dependent,” and “flexible.” 

At press time (about 2:25 PM EST), the markets appear to have already priced-in the interest rate decision. U.S. equities have held early-session gains, commodities are flat, and the USD is holding firm across the majors.

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About the author

Shain Vernier // US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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