US Fed keeps interest rates on hold
The central bank says the case for a hike has strengthened.
The US Federal Reserve has kept its interest rates on hold at 0.25-0.50% but says the case for a hike has "strengthened."
The world's biggest central bank has opted to “wait for further evidence of continued progress toward its objectives.”
The decision comes as little surprise as the market was pricing in an almost 90% chance the Fed would leave rates on hold.
“Information received since the Federal Open Market Committee (FOMC) met in July indicates the labour market has continued to strengthen and growth of economic activity has picked up from the modest pace seen in the first half of the year,” the Fed says.
Although upbeat on employment and economic growth, the Fed is still worried about persistently low inflation.
“Inflation has continued to run below the committee’s 2% long-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports.”
The Fed says it expects economic conditions will “evolve in a manner that will warrant only gradual increases in the federal funds rate” and it says interest rates are likely to remain “below levels that are expected to prevail in the longer run.”
But any decision the committee makes will be dependent on the economic outlook and will be influenced by the data.
The focus now will be on the Fed’s December meeting when the central bank is tipped to increase rates for the first time since December last year.
Although there is an FOMC rate decision in November, it is widely expected the committee will again keep rates on hold as the meeting is just weeks before the US presidential election.
Seven FOMC members, including Fed chairwoman Janet Yellen, voted to keep rates on hold, while three voted to raise rates.
Jason Walls
Thu, 22 Sep 2016
Thu, 22 Sep 2016
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US Fed keeps interest rates on hold
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