Home Business Federal Reserve Remains Positive on Economy and Leaves Interest Rates Unchanged

Federal Reserve Remains Positive on Economy and Leaves Interest Rates Unchanged

The Federal Reserve remained positive on the economy, as it kept interest rates on hold in its first meeting since President Donald Trump took office.

The central bank ruled unanimously to keep its benchmark interest rate in a range of 0.5% to 0.75%.

It said the jobs market and economic activity had continued to strengthen.

“Measures of consumer and business sentiment have improved of late,” the Fed also said in a statement.

It had raised its benchmark interest rate by 0.25% in December, only the second increase in a decade.

President Donald Trump has promised to boost growth through tax cuts, spending and deregulation, raising the prospect of higher inflation.

Fed chief Janet Yellen warned last month that, with the economy near full employment, the central bank risked a “nasty surprise” on inflation if it was too slow with rate hikes.

On February 1, the Fed said inflation “will rise to 2% over the medium term”, but did not comment on the effect of the Trump administration’s plans.

Despite being upbeat, the Fed also signaled the Federal Open Markets Committee (FOMC), the body which sets rates, would still only make “gradual increases”.

It did not give any update on when the body might next raise rates.

Investors were hoping for guidance on when the next rise would be and how many were planned for this year.

Official figures last week indicated the US economy grew at an annual pace of 1.9% in Q4 of 2016, a slowdown from growth in the previous quarter of 3.5%.

However, the Fed’s outlook suggested “the economy continues to chug along and sentiment has improved”, said Brian Jacobson, chief portfolio strategist at Wells Fargo.

The dollar and US stock markets were little changed on the Fed’s announcement, as investors had widely expected rates to be left untouched.


The Dow Jones index rose 0.1% at 19,891 points. The S&P 500 index moved less than 1 point to 2,279 and the NASDAQ edged up 0.5% at 5,643.

Clyde is a business graduate interested in writing about latest news in politics and business. He enjoys writing and is about to publish his first book. He’s a pet lover and likes to spend time with family. When the time allows he likes to go fishing waiting for the muse to come.