WASHINGTON, June 19 (Xinhua) -- The U.S. Federal Reserve on Wednesday opened the door for lowering interest rates in the future as officials weighed mixed signals on the health of the U.S. economy and the impact of trade tensions.
In a statement after concluding a two-day policy meeting, the Fed left the target range for the federal funds rate unchanged at 2.25 percent to 2.5 percent, while highlighting increased "uncertainties" about the U.S. economic outlook.
The Fed downgraded its assessment of economic activity to a "moderate rate" of expansion from the "solid" pace it saw in May. While the labor market "remains strong," indicators of business fixed investment "have been soft" and inflation continued to run below the central bank's 2 percent target, the Fed noted.
"In light of these uncertainties and muted inflation pressures, the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion," the Fed's policy-making committee said, dropping its commitment to being "patient" in its policy statement.
Many Fed officials "now see that the case for somewhat more accommodative policy has strengthened," Fed Chairman Jerome Powell said Wednesday at a press conference.
The meeting came as market participants are expecting the Fed to lower interest rates later this year, partly due to concerns about the rising costs of trade tensions and slowing global growth.
U.S. President Donald Trump has also repeatedly pressured the Fed to lower rates and boost economic growth.
However, Fed officials were strongly divided over the future path of interest rates. Eight of 17 officials expected the Fed to lower rates by the end of the year, while another eight saw no change and one projected a rate increase, according to updated quarterly forecasts of the federal funds rate released Wednesday.
"I would say there was not much support for cutting rates now at this meeting," Powell told reporters, adding Fed officials would like to wait and see more data before moving rates.
"We felt that it would be better to get a clearer picture of things, and that we would in fact learn a lot about these developments in the near term," he said.
"Ultimately the question we're asking ourselves is are these risks going to be continuing to weigh on the outlook, and we will act as needed, including promptly if that's appropriate, and use our tools to sustain the expansion," he added.
While there was not enough support for a rate cut right now, Diane Swonk, chief economist at Grant Thornton LLP, believed that Powell had opened the door for a rate cut as soon as July.
"Powell said that cross currents on trade and tariffs have reemerged and may have contributed to a deterioration in business confidence. He also emphasized that many now believe a more accommodative stance on policy is necessary. This sets the stage for a July cut," Swonk wrote Wednesday in an analysis.
"The Fed turned more dovish than I anticipated, basically announcing a July rate cut as clearly as they could without taking out an ad in the Wall Street Journal," said Tim Duy, a long-time Fed watcher and professor at the University of Oregon.
"Powell and his colleagues knew exactly how the market would react to this meeting and did nothing to push back against that reaction. It would be exceedingly difficult to pull back on a rate cut now," he said.
Nearly 40 percent of economists expected the Fed to lower rates in July, while roughly 30 percent foresaw a rate cut in September, according to a survey released by the Wall Street Journal earlier this month.