Fed now foresees fewer interest rate increases during 2016

That outlook was clouded by its assessment that “global economic and financial developments continue to pose risks”.

The so-called core PCE (personal consumption expenditures) price index, a Fed’s preferred measure of core inflation excluding food and energy, increased 1.7 percent in January from a year ago, the biggest year-on-year gain since the end of 2012. As a result, markets were already expecting a more dovish stance, such as only two quarter-point rate rises this year, well before the Fed confirmed on Wednesday it had scaled back its forecast and left open its options over the timing of the next increase.

The central bank, which hiked rates in December for the first time in almost a decade, sounded a cautious note at its last policy meeting in January, amid a selloff on financial markets, weaker oil prices and falling inflation expectations.

The European Central Bank unleashed another round of unprecedented stimulus last week that included a cut in a key interest rate further below zero.

In late NY trading on Wednesday, the euro rose to $1.1183 from $1.1105 of the previous session, and the British pound climbed to $1.4230 from $1.4143, Xinhua news agency reported.

Holdings in exchange-traded funds backed by gold rose 0.1 percent to 1,734.6 tons on Tuesday, near the highest level since July 2014, according to data compiled by Bloomberg.

“Economic growth overseas appears to be running at a somewhat softer pace that previously expected”, she said in press conference in Washington. Officials still expect the economy to expand at an annual rate of about 2 percent, and they still expect inflation to rise gradually, remaining below a 2 percent annual pace until 2018. Before the Fed announcement, gold futures for delivery in April fell 0.1 percent to settle at $1,229.80 on the Comex. A firmer rand eases the pressure on the inflation outlook and supports unchanged interest rates on Thursday by the Reserve Bank.

Some progress has also been made on the inflation side of the Fed’s dual mandate. The Dow Jones industrial average was up 74.23 points at 17,325.76, while the broader S&P 500 composite index advanced 11.29 points to 2,027.22 and the Nasdaq composite gained 35.30 points to 4,763.97.

But as long as the Fed doesn’t upset its friends on Wall Street, everything’s fine, we’ll be told.

Fed Chair Janet Yellen spoke to the media after the conclusion of its policy meeting.