US Federal Reserve keeps rates on hold

By Killian Plastow
 — 1 minute read

The US Federal Reserve has decided to hold the federal funds rate steady, electing to keep it within the 0.25 to 0.5 per cent target range.

Federal Reserve chair Janet Yellen said the “accommodative policy” would help ensure maximum employment and price stability given the current economic outlook.

“The Committee continues to anticipate that gradual increases in the federal funds rate over time are likely to be consistent with achieving and maintaining our objectives, however recent economic indicators have been mixed, suggesting that our cautious approach to adjusting monetary policy remains appropriate,” she said.


Ms Yellen said “disappointing” labour market data, low short-term interest rates and the current state of the global economy are among the chief reasons for the Fed's decision, but added that as the economy changes, the “path of policy will shift correspondingly”.

The Fed still anticipates two raises this year, unchanged from previous months, but Pimco managing director and global strategic adviser Richard Clarida notes that projected raises for 2017 and 2018 have gone from four to three per year.

While the Fed maintains its ability to “hike when it sees fit”, Mr Clarida said it is yet to provide a framework to understand how or when such a decision is made.

“Investors in the US are scrutinising central bank policy and asking whether, over the longer term, it may be exhausting its ability to spur economic growth and inflation,” he said.

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US Federal Reserve keeps rates on hold
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