The Fed keeps interest rates stable and expressed confidence in US economy – Portafolio.co

The Federal Reserve maintained the stable interest rates Wednesday, but expressed confidence in the prospects of the US economy, leaving open the door for a hike in June.

The monetary policy committee of the US central bank said the labor market had improved further despite the recent slowdown in the economy and that remained attentive to inflation.

He added that the difficulties of the situation of the global economy remained on the radar, but removed specific reference to its previous policy statement on the risks they represent.

“The committee continues to monitor closely inflation indicators and global economic and financial developments,” the Fed said in its statement to conclude a two-day meeting.

The central bank kept its federal rate of overnight loans in a range of 0.25 to 0.50 percent.

The Fed raised rates in December for the first time in nearly a decade. For the third consecutive meeting, the statement did not mention the balance of risks facing the economy.

However, the Fed noted that while household spending was moderate, real family income had risen to a “solid pace”, while consumer confidence remained high.

CONFIDENCE iN REACHING GOAL iNFLATION

inflation has recently accelerated, but the Fed said on Wednesday it expected to remain low in the short term, partly due the decline in energy prices.

The company added that maintains its confidence that inflation would move towards its target of 2 percent in the medium term.

Despite the sharp rise of the labor market and an unemployment rate of 4.9 percent, Fed officials had previously said it would proceed with caution with regard to raise interest rates again due the uncertainty of the global economy and limited inflation pressures locally.

A settlement of shares and tightening financial markets due mainly to the slowdown in China’s economy earlier this year led to the monetary policy committee of the Fed to lower their expectations for hikes rates this year. Fed officials currently projected two rate hikes in 2016, compared with four increases that were foreseen in December.

The stock markets have maintained their advance from the Fed meeting in March and concern of investors has been tempered by an apparent recovery of the Chinese economy. Oil prices have also risen from their lows earlier this year and the dollar has ceded part of the fortress that accumulated last year.

The strong advance of the greenback in 2015 acted as a drag on the US manufacturing sector and other segments of the economy.

Other important central banks strive to launch measures to alleviate the slowdown in their economies, including the application of negative interest rates.

Meanwhile, the Fed is concerned that by having interest rates still near zero would have to resort to unconventional monetary policy tools if the US economy faces headwinds and a panorama adverse.

On Thursday, the first estimate of growth in gross domestic product of the US in the first quarter will be known and is expected to show slight growth.
The president of the Kansas City Fed, Esther George, he dissented from the decision for the second straight game.