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Fed Holds Key Interest Rate Steady, But Increase Expected In December

President Trump hasn't said whether he will reappoint Federal Reserve Chair Janet Yellen to a second term. He is expected to announce his decision Thursday.
Chip Somodevilla
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Getty Images
President Trump hasn't said whether he will reappoint Federal Reserve Chair Janet Yellen to a second term. He is expected to announce his decision Thursday.

A day before President Trump was expected to name their next leader, Federal Reserve policymakers decided to hold a key interest rate steady at between 1 percent and 1.25 percent. However, analysts are still looking for a rate increase at the central bank's next meeting, in mid-December.

The Fed's post-meeting statement would seem to support that expectation. Policymakers slightly upgraded their assessment of economic growth from moderate to "solid" despite disruptions from hurricanes Harvey and Irma. And they said the labor market has continued to strengthen, despite a hurricane-related drop in payroll numbers in September.

But Fed officials also noted that inflation has remained soft, and below the 2 percent level they think is best for the economy. Some regional Fed bank presidents have suggested that because of that, the Fed should adopt a wait-and-see attitude on a December rate hike.

This may have been one of the final meetings for Fed Chair Janet Yellen. Her term expires early next year and it's expected Trump will replace her. At a Cabinet meeting Wednesday, Trump said he would announce a "new head" of the Fed Thursday afternoon. A current Fed governor, Jerome Powell, appears to be the front-runner to be nominated. He is a former investment banker and was Treasury undersecretary in the George H.W. Bush administration.

It's still possible, however, that Trump could reappoint Yellen to a second term. "I think Janet Yellen is excellent," Trump said at the Cabinet meeting. Asked if he was going to reappoint her, the president replied, "I didn't say that."

Copyright 2020 NPR. To see more, visit https://www.npr.org.

John Ydstie has covered the economy, Wall Street, and the Federal Reserve at NPR for nearly three decades. Over the years, NPR has also employed Ydstie's reporting skills to cover major stories like the aftermath of Sept. 11, Hurricane Katrina, the Jack Abramoff lobbying scandal, and the implementation of the Affordable Care Act. He was a lead reporter in NPR's coverage of the global financial crisis and the Great Recession, as well as the network's coverage of President Trump's economic policies. Ydstie has also been a guest host on the NPR news programs Morning Edition, All Things Considered, and Weekend Edition. Ydstie stepped back from full-time reporting in late 2018, but plans to continue to contribute to NPR through part-time assignments and work on special projects.