Federal Reserve

Fed sees no action on rates until 2021

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Key Points
  • The Federal Reserve forecasts no action on its main interest rate next year. 
  • The central bank's median rate is forecast to hold steady at 1.6% through the end of 2020, but will increase to 1.9% in 2021. 
Jerome Powell, chairman of the U.S. Federal Reserve.
Andrew Harrer | Bloomberg | Getty Images

The Federal Reserve forecasts no action on its main interest rate until 2021, after holding rates steady in its December meeting Wednesday. 

The central bank's median rate is forecast to hold steady at 1.6% through the end of 2020, but will increase to 1.9% in 2021. 

In September, the Federal Open Market Committee was divided about future action on the fed funds rate.The Fed began slashing interest rates in July to boost the economy as the U.S.-China trade war weighs on global growth. It was the first rate cut since the financial crisis. The central bank cut its benchmark rate in October for the third time this year.

Fed Chairman Jerome Powell has repeatedly said the central bank will act as appropriate to sustain the economy. The U.S. economy grew faster than expected in the third quarter, driven largely by strong consumer spending.

Unemployment has fallen to a 50-year low of 3.5%.

Every quarter, members of the Federal Open Market Committee forecast where interest rates will go in the short, medium and long term. These projections are represented visually in charts below called a dot plot.  

Here are the Fed's latest targets, released in Wednesday's statement:

This is what the Fed's forecast looked like in September: