US Fed keeps interest rates unchanged
Washington, July 28 (IANS) US Federal Reserve on Wednesday kept federal funds rate unchanged, reiterating that it continues to closely monitor inflation indicators and global economic and financial developments.
“Near-term risks to the economic outlook have diminished,” said the Fed in a statement after concluding two-day monetary policy meeting, Xinhua news agency reported.
This new expression might indicate that conditions are getting more favorable for further interest rate hikes in the future.
Fed officials gave more upbeat description of the economy. There was some increase in labor utilisation in recent months, pointing to a healthy labor market despite the slowdown in April and May. Household spending have grown “strongly.”
Inflation continues to run below the Fed’s 2 per cent target, a major concern for Fed officials. But they expected inflation to rise to the target over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further.
While Fed policymakers said they continued to closely monitor inflation data and global economic and financial developments, the improved job and consumption data eased Fed officials concerns over the economy’s near-term risks.
The Fed raised its target range for the federal funds rate to 0.25 per cent to 0.5 per cent in December last year, the first rate hike in nearly a decade, marking the end of an era of extraordinary easing monetary policy.
But the turmoil in financial markets and a slowdown in global economy since the start of the year have raised increased concerns about the strength of the US economy, forcing Fed policymakers to hold off on any further rate hikes since then.
US dollar mixed on Fed statement
New York, July 28 (IANS) The US dollar traded mixed against other major currencies on Wednesday as investors were digesting the newly-released Federal Reserve statement after its two-day policy meeting.
In late New York trading, the euro rose to $1.1009 from $1.0986 of the previous session, and the British pound rose to $1.3172 from $1.3143, Xinhua news agency reported.
The Australian dollar went down to $0.7464 from $0.7507.
The dollar bought 105.64 Japanese yen, higher than 104.70 yen of the previous session. The dollar declined to 0.9915 Swiss francs from 0.9926 Swiss francs, and it inched up to 1.3216 Canadian dollars from 1.3202 Canadian dollars.
The US central bank left federal funds rate unchanged in Wednesday’s statement, reiterating that it continues to closely monitor inflation indicators and global economic developments.
“Near-term risks to the economic outlook have diminished,” the Fed said, adding that there was some increase in labor utilisation in recent months and household spending have grown “strongly”.
Analysts said the Fed’s overall description of the economy was upbeat, which might indicate that conditions are getting more favorable for further interest rate hikes in the future.
The dollar index, which tracks the greenback against six major peers, was up 0.04 per cent at 97.193 in late trading.