Wednesday, January 27, 2016 7:44:18 PM
Federal Reserve acknowledges slower growth, leaves interest rates unchanged
The Federal Reserve on Wednesday acknowledged that the U.S. economy has slowed down but provided little guidance about when it would raise interest rates again.
The central bank began pulling back its support for the recovery in December and signaled it anticipated increasing its benchmark rate four times this year. But weeks of turmoil on Wall Street have spurred doubts about whether the Fed will forge ahead.
For now, the central bank is standing pat. In a unanimous vote Wednesday, the Fed left the range for its benchmark interest rate unchanged between 0.25 and 0.5 percent. Its official statement emphasized the resilience of the job market despite the weakened recovery and pointed out strength in consumer spending and the housing sector.
Yet broader economic growth has disappointed once more. The Fed's statement cited weak exports and inventory investment among the culprits. Low oil and commodity prices have pushed down inflation. And the central bank alluded to the volatility in financial markets but carefully avoided making any judgment calls.
The Fed is "closely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation, and for the balance of risks to the outlook," its statement read.
U.S. stock markets dropped after the announcement, with the blue-chip Dow Jones industrial average giving up 223 points to close down 1.4 percent at 15,944.46. The Dow and the broader Standard & Poor's 500-stock index see-sawed earlier in the day, opening in negative territory but briefly turning positive before closing in the red.
The Fed has emphasized that it expects future rate increases to be "gradual," and central bank forecasts released last year suggested that meant moving once a quarter. But investor expectations for a second Fed rate hike in March are dropping. Futures markets indicate a one-in-four chance that the central bank will make a move, down from roughly even odds last year. Some analysts question whether the Fed will raise rates at all -- and even whether they might be forced to reverse course.
https://www.washingtonpost.com/news/wonk/wp/2016/01/27/federal-reserve-acknowledges-slower-growth-leaves-interest-rates-unchanged/
The Federal Reserve on Wednesday acknowledged that the U.S. economy has slowed down but provided little guidance about when it would raise interest rates again.
The central bank began pulling back its support for the recovery in December and signaled it anticipated increasing its benchmark rate four times this year. But weeks of turmoil on Wall Street have spurred doubts about whether the Fed will forge ahead.
For now, the central bank is standing pat. In a unanimous vote Wednesday, the Fed left the range for its benchmark interest rate unchanged between 0.25 and 0.5 percent. Its official statement emphasized the resilience of the job market despite the weakened recovery and pointed out strength in consumer spending and the housing sector.
Yet broader economic growth has disappointed once more. The Fed's statement cited weak exports and inventory investment among the culprits. Low oil and commodity prices have pushed down inflation. And the central bank alluded to the volatility in financial markets but carefully avoided making any judgment calls.
The Fed is "closely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation, and for the balance of risks to the outlook," its statement read.
U.S. stock markets dropped after the announcement, with the blue-chip Dow Jones industrial average giving up 223 points to close down 1.4 percent at 15,944.46. The Dow and the broader Standard & Poor's 500-stock index see-sawed earlier in the day, opening in negative territory but briefly turning positive before closing in the red.
The Fed has emphasized that it expects future rate increases to be "gradual," and central bank forecasts released last year suggested that meant moving once a quarter. But investor expectations for a second Fed rate hike in March are dropping. Futures markets indicate a one-in-four chance that the central bank will make a move, down from roughly even odds last year. Some analysts question whether the Fed will raise rates at all -- and even whether they might be forced to reverse course.
https://www.washingtonpost.com/news/wonk/wp/2016/01/27/federal-reserve-acknowledges-slower-growth-leaves-interest-rates-unchanged/
My post is for Your Eyes only and my entertainment
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
