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US Federal Reserve Board keeps benchmark interest unchanged

US Federal Reserve Board keeps benchmark interest unchanged

The US Federal Reserve kept its benchmark interest rate unchanged on Wednesday but gave no clear signal about the chances for another increase this year.

But the central bank did confirm that it plans to begin to reduce its massive bond holdings "relatively soon."
In the absence of any signs of inflation pressure, the policy-setting Federal Open Market Committee elected to hold off on raising the key lending rate, and repeated that it "is monitoring inflation developments closely."
But the statement at the conclusion of the two-day meeting gave economists very few hints of the Fed's thinking since it was barely changed from the statement issued in June, when the central bank raised interest rates by a quarter point to the current range of 1.0-1.25 per cent.
Despite nearly seven years of uninterrupted job creation and a very low unemployment rate of 4.4 per cent, inflationary pressures and wage gains have shown little sign of life, something that has baffled economists.
The Fed has pointed to transitory factors like falling prices for mobile phone plans and prescription drugs, which will continue to depress closely-watched inflation measures for some time, but some analysts are skeptical that those factors explain the whole story.
The statement noted that the 12-month inflation rate as well as the core measure that excludes volatile food and energy prices have declined "and are running below two percent." The June statement said the rates were "somewhat below" that target – one of very few minor changes in the language.

Agencies

Agencies

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