Thursday , October 13 2016
Home / Business / Financials / Fed keeps key interest rate unchanged

Fed keeps key interest rate unchanged


Washington: The Federal Reserve said late on Wednesday that it will maintain the target range for the federal funds rate at 0.25 percent to 0.5 percent, pledging to keep the accommodative monetary policy to support economic growth.

The labour market conditions improved further even as economic growth slowed late last year and household spending and business fixed investment have been increasing at moderate rates in recent months, the Fed said after its two-day monetary policy meeting.

“The committee is closely monitoring global economic and financial developments and is assessing their implications for the labour market and inflation,” the Fed’s policy-setting committee said in a statement.

The Fed decided to raise benchmark interest rate by 25 basis points in December last year, the first interest rate increase since 2006 and marking the end of an era of extraordinary easing monetary policy, Xinhua news agency reported.

Analysts expected the Fed will raise the rates for four times in 2016, but Fed Chair Janet Yellen reiterated that future increases in interest rate will be data dependent and the central bank will not follow any mechanical formula in the path of rate hikes.

In the statement on Wednesday, the Fed said it will assess a wide range of information including measures of labour market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments to decide the pace of the future rates hike.

“In light of the current shortfall of inflation from two percent, the committee will carefully monitor actual and expected progress toward its inflation goal,” said the statement.

The committee expected the economic conditions would evolve in a manner that will warrant only gradual increases in the federal funds rate and the rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.

Analysts held that the ongoing global economic turbulence has huge impact on the US economy, which lessened the chances for the Fed to raise rates at its next meeting in March.

Read Also


Chinese shares open mixed