US Fed holds rates steady ahead of leadership change | Business| Economy and finance news from a German perspective | DW | 01.11.2017
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Business

US Fed holds rates steady ahead of leadership change

The US central bank keeps moving cautiously toward a third interest rate hike — possibly in December — as it has left current rates unchanged amid efforts to balance a strong US economy with stubbornly low inflation.

The US Fed's Federal Open Market Committee (FOMC) said Wednesday that the key interest rate for overnight loans to banks would stay in a target range of 1 percent to 1.25 percent after core inflation — excluding volatile food and energy prices — "remained soft."

At the end of a two-day FOMC meeting, policymakers however signalled that "gradual rate rises" were in the pipeline despite inflation remaining persistently below the central bank's target of close to 2 percent. But they did not offer any explicit indications as to when the next rate hike will come.

Read more: US Fed to start unwinding its bloated balance sheet

The Fed has increased US benchmark interest rates in three steps by one percentage point since December 2015 amid an accelerating upswing in the US economy. On Wednesday, the bank said in a statement that the US labor market had continued to imüprove and "economic activity has been rising at a solid rate despite hurricane-related disruptions."

Investors are expecting a further quarter-point rate hike at the Fed's final meeting of the year on December 12-13. US monetary policy beyond that date however remains uncertain, even more so as US president Donald Trump is set to announce a candidate to replace current Fed chair Janet Yellen whose term will expire in February.

uhe/jd (Reuters, AFP, dpa)

 

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