Date
23 October 2017
The Federal Reserve noted an improving labor market while saying economic growth seemed to have slowed. Photo: Bloomberg
The Federal Reserve noted an improving labor market while saying economic growth seemed to have slowed. Photo: Bloomberg

Fed signals no rush to hike rates as economy hits soft patch

The Federal Reserve left interest rates unchanged on Wednesday, but kept the door open to a hike in June.

It showed little sign it was in a hurry to tighten monetary policy amid an apparent slowdown in the US economy, Reuters reports.

In a statement that largely mirrored the one issued after its last policy meeting in March, the US central bank’s rate-setting committee described an improving labor market but acknowledged that economic growth seemed to have slowed, the news agency said.

It also said it was closely watching inflation and noted that global economic headwinds remained on its radar, though it made no mention of the risks they posed, as it had last month.

“The committee continues to closely monitor inflation indicators and global economic and financial developments,” the Fed said following a two-day meeting.

Prices for US equities edged up after the announcement, while the dollar was little changed against a basket of currencies.

Prices for longer-dated US Treasuries rallied.

Traders kept their bets that the first rate hike of 2016 would come in September and gave less-than-even odds of a follow-up hike by December.

Fed policymakers in March forecast two hikes this year.

Investors currently see a 23 percent probability that the Fed’s overnight lending rate will rise in June, up from 21 percent prior to the decision, according to CME’s FedWatch group.

“This latest statement has not laid out a strong position for a June rate hike,” said Bill Irving, a portfolio manager with Fidelity Investments.

– Contact us at [email protected]

RA/CG

EJI Weekly Newsletter

Please click here to unsubscribe