Speaking after the USA central bank’s monetary policy committee voted to keep rates unchanged between 0.25% and 0.5%, its chairwoman Janet Yellen said the 23 June vote could have worldwide economic implications.
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While voicing confidence in continued U.S. economic growth, Fed Chair Janet Yellen said the June 23 referendum on Britain quitting the European Union was an important factor in the Fed keeping monetary policy on hold.
Yellen said the USA economy appeared to have gained momentum since April, but that the labor market had lost some steam. In December it raised them a quarter percentage point for the first time since 2006 and indicated more rises would come, a decision the Fed chair, Janet Yellen, was quizzed on during today’s press conference. Fed Chairwomen Janet Yellen clearly said that she needs clear signs of economic strength before she can increase the rates again.
The Fed left its target range for overnight lending rates between banks at between 0.25 percent to 0.50 percent, keeping on hold a campaign to lift borrowing costs that started late a year ago.
Highlighting the Brexit risk, Yellen said, “It is a decision that could have consequences for economic and financial conditions in global financial markets”.
“The pace of improvement in the labor market appears to have slowed markedly”, she said. United States stocks closed lower.
The benchmark overnight lending rate stayed in the range of 0.25 – 0.5%.
The US Federal Reserve on Wednesday kept interest rates unchanged and signaled it still plans to raise rates twice this year, although it said slower economic growth would crimp the pace of monetary policy tightening in future years.
Bullard’s decision not to submit a long-run rate forecast, displayed in a so-called dot plot, marks a departure from Fed orthodoxy.
“The Committee continues to anticipate that gradual increases in the federal funds rate over time are likely to be consistent with achieving and maintaining our objectives, however recent economic indicators have been mixed, suggesting that our cautious approach to adjusting monetary policy remains appropriate”, she said.
Expectations for a rate rise fell after the May jobs report was released. Concerns about a global economic slowdown and volatility in financial markets subsequently reduced that number to two. None of the June 15, ABC, CBS or NBC evening news shows reported the Fed’s decision.
But a surprisingly weak jobs report on June 3 led analysts to forecast Fed policymakers would hold off on a rate hike until July at the earliest.
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Economists polled by Reuters had seen virtually no chance that the Fed would raise rates on Wednesday.
