Fed Reserve keeps interest unchanged, says inflation close to target

The US central bank's Federal Open Market Committee (FOMC) held the rate at a target of 1.5 per cent to 1.75 per cent.

The Federal Reserve has kept interest rates unchanged, while acknowledging that inflation has started to creep higher.
 
The US central bank's Federal Open Market Committee (FOMC) held the rate at a target of 1.5 per cent to 1.75 per cent.
 
"The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation,  the FOMC said in a statement on Wednesday in Washington.
 
The decision to maintain the status quo was a unanimous decision by all eight members.
 
“Inflation on a 12-month basis is expected to run near the committee’s symmetric 2 per cent objective over the medium term,” said the statement. 
 
The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal, the statement said. 
 
"The Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run," it said.
 
However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.
 
The FOMC also noted the weakness in growth in the first quarter, removing a reference in the in March statement that the economic outlook had “strengthened in recent months.” They balanced that out by noting strong growth in business investment.
 
US economic growth cooled in the first quarter to an annualized pace of 2.3 per cent after averaging higher than 3 per cent in the previous three quarters.
 
The Fed Reserve hike rates three times last year. The officials said in March they expect a total of three or four hikes in 2018.
 
Source: Media reports

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