Tags: Federal Reserve | interest rates | zero | percent

Fed Holds Rates Near Zero Percent on Global Economic Weakness

Fed Holds Rates Near Zero Percent on Global Economic Weakness
Federal Reserve Chair Janet Yellen, speaking to reporters on Thursday in Washington, said the central bank wants to see further improvement in the jobs market before raising interest rates. (Photo: AP/Jacquelyn Martin)

Thursday, 17 September 2015 02:17 PM

Federal Reserve officials left interest rates unchanged, opting to delay an increase amid stubbornly low inflation, an uncertain outlook for global growth and recent financial-market turmoil.

“Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term,” the Federal Open Market Committee said in a statement Thursday in Washington.

In holding their benchmark federal funds rate at zero to 0.25 percent, policy makers showed they are still not convinced inflation will move gradually back to their 2 percent target, despite continued gains in the labor market. Unemployment in August fell to 5.1 percent, its lowest level since April 2008.

“On balance, labor market indicators show that underutilization of labor resources has diminished since early this year,” officials said.

The yield on the 10-year U.S. Treasury note fell to 2.23 percent at 2:10 p.m. in New York following the release of the statement from 2.30 percent late on Wednesday. The S&P 500 pared earlier gains.

Lacker Dissents

Richmond Fed President Jeffrey Lacker dissented, saying he preferred to raise the target rate by 0.25 percentage point.

Many economists have worried that recent losses in China’s equity markets reflect deeper worries over growth prospects for the world’s second-biggest economy. Slowing demand from China has also helped trigger a global slump in commodity costs, adding downward pressure to prices in the U.S.

Inflation, as measured by the Fed’s preferred gauge, was 0.3 percent in the 12 months through July and has lingered below 2 percent for more than three years.

The committee repeated that it will raise rates when it has seen "some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term."

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The Federal Reserve held interest rates near zero percent saying the global economy showed signs of weakness that merited caution. Recent global economic and financial developments may restrain economicactivity somewhat and are likely to put further downward pressure...
Federal Reserve, interest rates, zero, percent
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2015-17-17
Thursday, 17 September 2015 02:17 PM
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