Fed stands pat on interest rates

Fed stands pat on interest rates

As expected, the Federal Reserve's policymaking body chose to hold rates steady at its meeting today.

Federal Reserve officials left United States interest rates unchanged and stuck with a plan to gradually lift borrowing costs amid "strong" growth that backs bets for a move in September.

Economic activity has been "rising at a strong rate", and unemployment "has stayed low", the Federal Open Market Committee said on Wednesday in a statement released in Washington.

That will remove stimulus from the economy but is consistent with continued economic growth and job gains while keeping inflation near the Fed's two percent target over the medium term, the statement said. In a move, which analysts may perceive as act of defiance, the Fed policymakers signalled that they were still on track to raise rates for two more times this year. Fed policy makers have telegraphed a total of four rate hikes in 2018.

This is a developing story.

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Fed Chairman Jerome Powell recently said the economy was in a "really good place" and pledged to continue with gradual increases in borrowing costs in order to maintain the second-longest USA economic expansion on record. The comments threw a political cloud over the central bank's decisions, Bloomberg reported.

Economic growth has been buoyed by the fiscal stimulus from the Trump administration's tax cuts and spending.

The vote to hold rates unchanged for now was unanimous and comes after the economy grew 4.1 per cent in the April-June quarter, while inflation has crept up just above two per cent and wages at long last are beginning to accelerate.

They also remain wary of the potential harm to the US economy of a protracted trade war between the United States and China which could push the cost of goods higher and hurt corporate investment.

No mentions of tariffs or other specific risks to the economic outlook were mentioned.

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