The US Federal Reserve kept interest rates unchanged Thursday but left open the possibility of a modest policy tightening later this year, Reuters reported.
Fed chairwoman Janet Yellen said developments in the tightly linked global economy had forced the US central bank’s hand.
“The outlook abroad appears to have become less certain,” Yellen told a news conference after the Fed’s policy-setting committee released a statement following a two-day meeting.
She also said a recent fall in US stock prices and a rise in the value of the US dollar were already tightening financial market conditions, which could slow US economic growth regardless of what the Fed does.
The policy statement warned that recent developments abroad and in financial markets might restrain economic activity somewhat and likely put further downward pressure on inflation in the near term.
But the Fed maintained its bias toward a rate hike some time this year, while lowering its long-term outlook for the economy.
Fresh economic projections showed 13 of 17 Fed policymakers foresee raising rates at least once this year, down from 15 at the last meeting in June.
Traders in futures markets cut bets that the central bank would lift rates by December to about a 47 percent probability, from 64 percent before the release of the policy statement.
“We’re in the same situation we were in before, which is uncertainty about when are they going to move,” John Bonnell, a senior portfolio manager at USAA Investments in San Antonio, Texas, was quoted as saying.
The US dollar fell sharply against a basket of currencies after the release of the statement.
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