US Federal Reserve keeps interest rates unchanged

<p>The central bank said any decision will rely on inflation being stable.</p>

The Federal Reserve has decided to keep US interest rates unchanged at the end of its two-day meeting yesterday (October 28th). However, officials have suggested that they had become less concerned in recent weeks about the slowing down of the economy overseas. 

They signalled that they will assess if it was time to raise rates at their next meeting, as the US economy was still expanding at a moderate pace.

In a statement, the Fed said it was continuing to watch the global economy and domestic labour market for signs of strength.

"The Committee continues to see the risks to the outlook for economic activity and the labour market as nearly balanced, but is monitoring global economic and financial developments," it said.

Mixed data

In September, the Fed left short-term rates unchanged amid worries about weak growth abroad, particularly in China. Job data revealed there were 142,000 new jobs in September, compared with more than 200,000 per month from May to July. A strong dollar continues to dampen demand for American exports.

The Fed has followed the advice of the World Bank, which urged it to delay any rate rise until the global economy is in a more stable position. It said a September rate hike could trigger "panic and turmoil" in emerging markets.

However, Federal Reserve chair Janet Yellen said last month that the US remains "on track" for an interest rate rise this year, adding that a rate hike "sometime later this year" would "likely be appropriate". She noted that any decision will rely on inflation being stable and the US economy being strong enough to boost jobs.

"Most [policymakers] including myself, currently anticipate… an initial increase in the federal funds rate later this year, followed by a gradual pace of tightening thereafter," Ms Yellen said.

Interest rates have been kept to near zero since the financial crisis that began in 2007, as part of a set of measures taken by the Federal Reserve to help stabilise the US economy and financial system. 

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