US Federal Reserve keeps interest rates unchanged

The Committee expects that further gradual increases in the key rates will be consistent with sustained expansion of economic activity, strong labour market conditions and inflation near the Committee's symmetric 2 per cent objective over the medium term.

The US Federal Reserve, in its policy statement on Wednesday, kept interest rates unchanged. It said economic growth has been rising strongly and the job market has continued to strengthen, while inflation was close to central bank's 2 per cent target since its last policy meeting in June, when it raised rates.
 
"Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low. Household spending and business fixed investment have grown strongly," the Fed said in a unanimous statement following the conclusion of its latest two-day policy meeting.
 
The Committee expects that further gradual increases in the key rates will be consistent with sustained expansion of economic activity, strong labour market conditions and inflation near the Committee's symmetric 2 per cent objective over the medium term. 
 
"On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent. Indicators of longer-term inflation expectations are little changed, on balance," MOPC said. However, risks to the economic outlook appear roughly balanced, it said.
 
The US central bank, in last policy statement in June, raised interest rates by 25 basis points, keeping it in a range of 1.75 per cent to 2 per cent. Fed Chairman Jerome Powell termed the economy in a "really good place". 
 
The June hike was second time this year and the seventh time since the normalisation cycle began in 2017.
 
The economy grew at a pace of 4.1 per cent in the second quarter, its best showing in nearly four years, as consumers boosted spending and farmers rushed shipments of soybeans to China to beat retaliatory trade tariffs, Commerce Department data showed on Friday.
 
Back home too, the Reserve Bank of India hiked repo rates by 25 basis points for the second time after NDA government came to power. The first hike by RBI was done in June. 

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