In her news conference, Yellen offered a simple explanation for why the Fed didn’t raise rates: The economy can still grow without hurting itself.
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“The economy has a little more room to run than might have been previously thought”, Ms Yellen told a press conference in Washington after the Fed’s two-day meeting, as she explained the decision to keep rates on hold.
Yellen was asked a version of “Is that true?” four different times today. I know that these are hard decisions and everybody may not agree with them but I hope the public will understand that we are striving to do our best to pursue these goals that matter to all of us.
“I want to lead an institution that is not political”, she said, adding that there will be no sign of political motivation in the transcripts of Fed policy meetings, which are normally released only after five years.
The Federal Reserve held off on a rate hike, but three officials opposed the decision – the most dissents since December 2014.
Similarly, the BOJ, saying it will seek to blow its own 2 percent inflation target to the upside, is trying to appear strategically irresponsible, willing to do the unthinkable for a central bank in order to obtain the otherwise unobtainable result of rising inflation expectations.
Fed officials also marked down their estimate of the long-run level of short-term rates to 2.875 percent from 3 percent in June. It was down 0.1 percent at 100.155 yen, having lost 1.4 percent on Wednesday to touch a 3-1/2 week low of 100.30.
ENERGY: Oil prices jumped as fuel stockpiles shrank and investors hoped that supply gluts are easing, which would allow prices to rise.
USA economic growth was disappointing in the first half of the year.
Nearly 74% of economists surveyed by The Wall Street Journal earlier this month said the Fed’s next interest-rate increase would come in December.
The decision, at the end of a two-day meeting in Washington, leaves open the question of whether the committee might raise rates when it next meets in October, shortly before the US presidential election.
She played down concerns that the Fed’s easy monetary stance was fueling bubbles in the financial markets and the economy. That’s where it had been left for seven years as the central bank tried to support growth coming out of the Great Recession. The ruling boosted dividend-paying companies while bond prices changed course and moved higher.
In commodity markets, gold traded at $1,332.36 an ounce (XAU=), having climbed 1.6 percent as the USA dollar declined.
Our market will open around 30 points higher after trading overnight on the ASX futures market, with a so;id gain after the Fed’s decision was announced.
Most economists expect the Fed to leave rates unchanged. That means policymakers think the economy is about as likely to outperform forecasts as to underperform them.
The median of officials’ projections showed they expected to raise the benchmark rate, likely in quarter-percentage-point steps, two more times in 2017, to between 1% and 1.25%, then three times in 2018 to between 1.75% and 2% and three times in 2019 to between 2.5% and 2.75%. The yield on the 10-year Treasury note fell to 1.66 percent from 1.69 percent.
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The Dow Jones industrial average was up 48.01 points, or 0.26 percent, to 18,177.97, the S&P 500 had gained 8.52 points, or 0.4 percent, to 2,148.28 and the Nasdaq Composite had added 19.20 points, or 0.37 percent, to 5,260.55.
