Upbeat US Fed leaves interest rate alone | News | DW | 28.01.2015
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Upbeat US Fed leaves interest rate alone

The US Federal Reserve has reiterated that it will be "patient" in raising interest rates from record lows, but is signaling greater concern about excessively low inflation.

In a statement released after its latest policy meeting, the Fed said that the US economy was expanding further despite weakness overseas, in a signal that it remains on track to raise interest rates later this year.

Recent economic data shows the US economy expanding "at a solid pace," the rate-setting US central bank said in its monetary policy statement. "Household spending is rising moderately. Business fixed investment is advancing, while the recovery in the housing sector remains slow."

There was good news for the US job market. "Labor market conditions have improved further, with strong job gains and a lower unemployment rate," it said. "Recent declines in energy prices have boosted household purchasing power."

Ignoring global problems

In making its announcement, the Fed largely skirted over slumping economies in Europe and Asia, saying only that it would take "financial and international developments" into account when it made its decisions.

The Fed also noted that inflation remains well below its 2 percent target, and that the factors holding down inflation have intensified since its last meeting in December. Inflation is likely to decline further before rising again, it added.

The Fed's new concerns about low inflation could affect when it decides to raise its key short-term rate from near zero. Many economists have forecast a Fed rate hike in June but some have pushed back that timetable.

bk/hg (dpa, AP, AFP, Reuters)

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