Economic Commentary

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THE FED’S POLICY U-TURN

Economic Commentary |

The Federal Reserve (Fed) just delivered a widely expected but important monetary policy decision.

On January 30, policymakers decided to leave interest rates unchanged. More significantly, they removed language from the Fed’s policy statement that “some further gradual (rate) increases” would be consistent with economic conditions and added language that they would be “patient” when determining future rate adjustments. Markets cheered the significant shift in tone: The S&P 500 Index rose 1.6%, its biggest gain on a Fed day since December 2014, and the first time it has gained on the last day of the policy meeting since Jerome Powell took over as Fed chair.

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Barry Gilbert, PhD, CFA, Senior Analyst, LPL Financial
John Lynch Chief Investment Strategist, LPL Financial