Following a two-day policy meeting, the Federal Reserve kept its benchmark interest rates unchanged at near zero percent. The central bank also said that the US economy and jobs market are continuing to strengthen.
The bank’s rate-setting Federal Open Market Committee said in a policy statement on Wednesday that the US economy has expanded “moderately” in recent months and the jobs market had strengthened, but noted continued “soft” business investment and exports.
It also said that inflation remained softer than monetary policy makers wanted to see, though noting that much of the weakness was related to the plunge in energy prices over the past year and cheaper imports, thanks to the strong US dollar.
Although the policy statement may strengthen expectations of a rate hike at its September meeting, the Fed did not give a clear signal on when a long-awaited rate rise might come.
Instead, it said it wanted to see “some further improvement in the labor market,” and gain more confidence that low inflation will rise to its 2-percent medium-term target.
The central bank has kept rates at a near-zero level since December 2008 as part of its efforts to stimulate the US economy in the aftermath of the 2007-2009 financial crisis. But Janet Yellen, the Fed Chair, has recently said a rate increase is likely this year.
With no meeting scheduled in August, the Fed will have two months of data to analyze before deciding in September whether to hike rates for the first time since 2006.
sri/hg (Reuters, AFP)