Kansas City Federal Reserve President Esther George voted against this action, believing that a 25 basis point increase was warranted.
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Since then the Fed has signaled more caution, despite the US economy’s relative strength, as concerns a slowing China would depress global growth sparked steep stock price declines and tighter financial market conditions early in the year. However, it also tweaked the statement to say that economic activity “appears to have slowed” after describing it as moderately expanding in March.
Fed Chair Janet Yellen isn’t scheduled to hold a post- meeting press conference.
Markets have turned up since the last rate decision in March. Since then, markets have turned up, with the United States’ S&P 500 shares index up by more than 14 percent.
The central bank appeared to be less focused on global financial risks to the U.S. economy.
Most economists only expect two rate increases in 2016.
The Fed raised its federal funds rate in December for the first time in almost a decade – to a still historically low 0.4% – but has held rates steady since because of weakness overseas and related market turbulence.
Nonetheless, the Fed maintained, as it has for months, that the USA economy would still benefit from extremely low borrowing costs.
The U.S. Federal Reserve on Wednesday kept its benchmark short-term interest rate unchanged for a third meeting in a row while offering little clue on the timing of its next rate hike.
“The committee continues to closely monitor inflation indicators and global economic and financial developments”, the Fed said.
Oil prices also have rallied from a near-collapse earlier this year and the United States dollar has shed some of its strength from last year.
The Fed stuck to its stance that the United States monetary policy will tighten only gradually and gave no hint as to whether it could lift the short-term federal funds rate at its next meeting in June.
The Fed did not disappoint and in its statement signaled faith in the USA economy.
As expected, the Fed is holding steady on interest rates for now. Predictions from policymakers now show two, compared with four last December.
Other major central banks have been grappling with ways to deal with lacklustre economies, including the adoption of negative interest rates. Given that the central bank will be reluctant to move towards a rate hike in September just prior to the presidential election voting, a June or July hike look more of a possibility now.
On Thursday, for example, when the Bank of Japan meets, a key topic will be what else it might do to fight economic weakness, raise inflation and blunt a rise in the yen’s value against the dollar, which hurts Japan’s exporters.
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A smaller deficit in March could give first-quarter gross domestic product a nudge upward, though the number is still expected to be weak.
