Fed holds interest rates steady

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The U.S. central bank said it was “closely monitoring” global economic and financial developments, but maintained an otherwise upbeat view of the U.S. economy. Bobbi Rebell reports.

Fed holds interest rates steady

The U.S. central bank decided to hold interest rates steady at its January meeting, maintaining an upbeat view of the U.S. economy but saying it was closely monitoring global economic and financial developments. That is a change from the previous language, which talked about the risks to the economic outlook being balanced.

The decision had been widely expected, in part because the recent plunge in U.S. stocks had raised concerns about economic growth.

Stocks moved lower Wednesday afternoon, in part because of expectations a rate hike is still on the agenda, according to

Steven Ricchiuto U.S. Chief Economist at Mizuho Securities:


“Their intent is still to raise rates going forward, and I think from an equity market perspective where companies have been facing difficult pricing power, difficult global economic conditions, difficult domestic economic conditions, having a Federal Reserve that is not your cheerleader is just not well received. And that is why we are having the response we are having from the markets. “

Fed policy makers did not give updated forecasts on when or by how much they would raise rates in the future.

The statement did say they expected the labor market would continue to strengthen and the economy would expand even with “gradual adjustments in the stance of monetary policy.”

Regarding inflation, the Fed said it still expects the downward inflationary pressure from lower energy and import prices will be temporary.

In December the Fed raised rates by a quarter of a point, which was taken as a sign policy makers believed the economy had recovered from the 2007-2009 financial crisis and was holding its own despite economic weakness in China, Japan and Europe.

Tags : Steady, rates, interest, holds

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