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The Financial Express

US Fed leaves rates unchanged, signals patience about future hikes

| Updated: February 01, 2019 14:44:01


A view of the US Federal Reserve in Washington, DC, on Jan 27 (Collected photo) A view of the US Federal Reserve in Washington, DC, on Jan 27 (Collected photo)

The US Federal Reserve on Wednesday left interest rates unchanged as expected and pledged to be patient about future rate hikes.

In support of the goals to foster maximum employment and price stability, the Federal Open Market Committee (FOMC) decided to maintain the target range for the federal funds rate at 2.25 per cent to 2.5 per cent, the central bank said in a statement after concluding a two-day policy meeting.

The FOMC continues to view sustained expansion of economic activity, strong labour market conditions, and inflation near its 2.0 per cent objective as the most likely outcomes, the Fed said.

In contrast to the wording of "some further gradual increases" in interest rates in FOMC's December statement, this time it pledged a "wait-and-see approach" regarding future policy changes.

"In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes," it said.

The Fed in December raised short-term interest rates by a quarter of a percentage point, but signalled a slower pace of rate hikes in 2019 as the US economy was expected to cool down, reports Xinhua.

The policy-making committee has seen "some cross-currents" and "conflicting signals" about the generally positive economic outlook, including slower global growth, Brexit, ongoing trade negotiations and the effects from the 35-day partial government shutdown, Fed Chairman Jerome Powell said in a press conference Wednesday afternoon.

Financial conditions tightened considerably in late 2018, and some surveys of business and consumer sentiment have moved lower, "giving reason for caution," the chairman said, adding that "the case for raising rates has weakened somewhat."

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