5 Top Dividend Stocks To Buy As Rate Cut Odds Rise

At the end of its widely watched two-day policy meeting, the Federal Reserve left interest rates unchanged. Further, there was no formal word on whether rates would come down later this year. But during the press conference which followed the meeting, Fed Chair Jerome Powell stated that several policymakers believe that the time for a rate cut is fast approaching.

These are words which will surely please market participants. Apart from the rate-sensitive stocks, which will gain from softer rates, dividend-yielding stocks will also benefit. Not only will conservative investors seek them out, growth-oriented investors will also seek to gain from the price surge in high-yield stocks.

Fed Holds Rates Steady, Drops “Patient” Approach

The Federal Reserve has kept its benchmark lending rate unchanged within a targeted band of 2.25-2.5%. Rates have remained flat ever since the central bank controversially voted to raise rates in December. Policymakers voted 9-1 to keep rates flat with only Louis Fed President James Bullard asking for a rate cut.

However, the Fed did indicate that it was concerned about slower growth, dropping the word “patient” which it has used to characterize its approach till now. The central bank also admitted that inflation was “running below” its targeted level of 2%. In fact, the Fed cut its inflation estimate from 1.8% to 1.5%.

Coming to expectations about the key rate, eight members think at least one rate cut should take place this year. A similar number desires that the current level be maintained and only one member wants a rate hike.  For 2020, the consensus is largely dovish, with nine members opining that rates should come down to 2.1%.

Some Officials Think Rates Should be Cut, Says Powell

Speaking to the press after the meeting, Powell revealed that some officials think that the federal funds target rate should be reduced going forward. They believe that recent economic developments have strengthened the case for an easier approach to monetary policy.

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