Fed keeps US rate hike on hold

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The Federal Reserve has decided not to raise interest rates, maintaining the ultra-low level they have been at since December 2015.

The US central bank opted to keep rates between 0.25% and 0.5%.

The Fed said “near-term risks to the economic outlook have diminished,” but inflation remained below the bank’s target.

The Fed is still expected to raise rates twice this year. Investors expect the first increase to come in autumn.

In a statement, the Federal Open Market Committee (FOMC) said household spending was “growing strongly” and the unemployment rate had decreased for the last two months.

However, the Fed has held off on raising rates while inflation remains under its 2% target. The measurement used by the central bank lists current US inflation at 1.6% and it has hovered below the Fed’s target since 2012.

The committee blamed low energy prices for weighing on inflation.

Global market uncertainty, stemming from the UK’s decision to leave the European Union, led the Fed to hold off increasing rates when it met in June.

Only one member of the FOMC voted to raise rates.

Esther George, who leads the Kansas City Federal Reserve, has voted to raise rates several times in the past and said publicly she feels the central bank is being too cautious.



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