Federal Reserve leaves rates unchanged for third straight meeting
Investing.com -- As expected, the Federal Reserve left short-term interest rates unchanged on Wednesday, marking the third straight meeting the U.S. central bank has held rates steady in 2016.
In a relatively neutral April monetary policy statement, the Federal Open Market Committee left the target range on its benchmark Federal Funds Rate unchanged at a level between 0.25 and 0.50%. In December, the FOMC abandoned a seven-year zero interest rate policy by lifting the Fed Funds Rate by 25 basis points. It represented the first rate hike by the Fed in nearly a decade.
In determining the size of future adjustments to the Federal Funds Rate, the FOMC said it will assess economic conditions, measures of labor market conditions, inflationary pressures and expectations, as well as readings on financial and international developments. Since the FOMC last met in March, the central bank noted that economic activity has slowed in recent weeks.
While the Fed has expressed optimism with continued improvements in the labor market, the U.S. central bank has remained concerned with sluggishly low inflation in recent months. As oil prices hover near multi-year lows and the dollar remains markedly above its 2014 levels, long-term inflation has fallen under the Fed's 2% objective in every month over the last three years.
At the start of the year, however, there have been some signals that inflation is beginning to firm. In January, the Personal Consumption Expenditure (PCE) price index nearly doubled to 1.3%, hitting its highest level since the fall of 2014. The Core PCE Index, which strips out volatile food and energy prices, soared to 1.7%, its strongest annual gain since the end of 2012. The Core PCE Index, the Fed's preferred gauge for inflation, increased by 1.7% in both January and February. Further increases in inflation could compel the FOMC to lift interest rates in June.
The FOMC is scheduled to meet next on June 14-15.
Source: investing.com