US Federal Reserve keeps rates unchanged | Business| Economy and finance news from a German perspective | DW | 27.01.2016
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US Federal Reserve keeps rates unchanged

The United States central bank is keeping its key interest rate steady for now, saying it's "closely monitoring" global economic and financial developments. The bank has maintained an upbeat view of the US economy.

The central bank's decision on Wednesday was widely expected in spite of concerns that a recent plunge in US and world equities could herald an abrupt global slowdown that could weigh on US economic growth.

"The committee is closely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation," the Fed's policy-setting committee said in a statement.

The central bank said it was weighing how the global economy and financial markets could affect the US outlook.

Fed policymakers did not give updated forecasts on the longer-term path of monetary policy on Wednesday, but said they expected the labor market would continue to strengthen and the economy would expand even with "gradual adjustments in the stance of monetary policy."

The Fed last month raised its key overnight lending rate by a quarter point, to a range of 0.25 percent to 0.50 percent, a sign that in its judgment, the economy had largely recovered from the 2007-2009 financial crisis and was shrugging off economic weakness in China, Japan and Europe.

Ahead of the decision on Wednesday, investors were betting on a single quarter-point rate increase over the course of 2016, rather than the four that Fed policymakers had signaled in their December economic forecasts.

The Fed said on Wednesday that a range of recent labor market indicators, including "strong" job gains, pointed to some additional firming of the job market.

US exports took a hit last year, largely due to the impact of a strong dollar, but consumer spending accelerated and overall employment surged by 292,000 jobs in December.

Oil prices have continued to plummet this year, which could keep US inflation below the Fed's 2 percent target for longer, but a recent uptick in the consumer price index outside of food and energy could point to a stronger medium-term inflation outlook.

The Fed said it still expects downward pressure on consumer price inflation from lower energy and import prices to prove temporary.

uhe/nz (AFP, Reuters, dpa)

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