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Fed Chair Jerome Powell says the case for raising interest rates 'has weakened'

Key Points
  • Fed Chairman Jerome Powell came out with his strongest statement to date that the central bank is changing its tune on interest rate hikes.
  • "The case for raising rates has weakened somewhat," Powell says. 
  • The FOMC left its benchmark and said it would take a "patient" approach toward further hikes. 
Federal Reserve Board Chairman Jerome Powell arrives to speak at a press conference after the Fed announced interest rates would remain unchanged, in Washington, DC, January 30, 2019.
Saul Loeb | AFP | Getty Images

Federal Reserve Chairman Jerome Powell issued his strongest statement yet Wednesday that the central bank has changed its outlook regarding interest rate hikes.

"The case for raising rates has weakened somewhat," Powell said during a news conference following this week's two-day Federal Open Market Committee meeting.

The statement came after the FOMC decided to leave its benchmark interest rate target unchanged at 2.25 percent to 2.5 percent. In addition, the committee vowed to take a "patient" approach toward further hikes. Powell added that the funds rate is "in the committee's" range of a neutral rate estimate, a key measure for the Fed.

VIDEO1:0601:06
Powell: Patient 'wait and see" policy is warranted

The position on rates marks an evolving process for Powell, who has sent jitters through markets in recent months with remarks that indicated he believed the Fed would be continuing to raise interest rates at least until it found a neutral range.

"I would want to see a need for further rate increases," Powell said Wednesday, adding that inflation would be key.

Also causing some concern on the Fed are geopolitical issues like the ongoing Brexit negotiations and an economic slowdown in China.

As things currently stand, Powell said the committee can take its time before additional rate moves. The Fed has hiked its benchmark rate eight times since it began the normalization process in December 2015 and has indicated two more increases in 2019.

However, futures markets are pricing in no further tightening and in fact are noting a small chance for a rate cut over the next year. "Today, the FOMC decided that the cumulative effect of those developments … warrant a patient wait-and-see approach regarding future policy changes."

WATCH: Powell says Fed's motivation to do right thing for economy

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Fed's motivation to do right thing for economy, American people: Powell