Fed keeps policy on hold

It’s no surprise that the Fed keeps the federal funds rate target range unchanged at 1.50%-1.75%.

Repeats that it “judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation returning to the Committee’s symmetric 2% objective.”

Gives no hint as to the direction of the next rate adjustment.

10-year Treasury yield is down almost 5 basis points at 1.61% vs. down 4 bps to 1.62% before the announcement.

(TLT +0.6%), (TBT -1.1%)

In its implementation note, the FOMC directs the Open Market Desk to continue purchasing Treasury bills at least into Q2 2020 to “maintain over time ample reserve balances at or above the level that prevailed in early September 2019.”

Also directs the Desk to continue conducting term and overnight repurchase agreement operations (repo) at least through April 2020 to “ensure  ensure that the supply of reserves remains ample even during periods of sharp increases in non-reserve liabilities, and to mitigate the risk of money market pressures that could adversely affect policy implementation.”

The Desk had started repo operations in mid-September 2019 when money markets spiked as reserve levels fell.

Watch live webcast of Chair Powell’s press conference at 2:30 PM ET.