NEW YORK (AA) – The Federal Reserve on Wednesday kept its interest rate unchanged for the third time this year.
In a 9-1 vote, the Federal Open Market Committee (FOMC) decided to wait until the Fed’s next meeting in June before making a decision on a rate hike.
The head of the Kansas City Fed, Esther George, was the lone dissenter, as she was in the previous meeting.
The bank did not provide any hint at a rate hike in a statement following its two-day meeting but it eased up on previous concerns about global financial turmoil affecting the U.S. economy.
“The Fed dropped the warning that ‘global economic and financial developments continue to pose risks’ in its statement,” Paul Ashworth, chief U.S. economist at research consultancy Capital Economics, told Anadolu Agency.
Global financial turmoil and economic slowdown were regarded as risks in the Fed’s statement in March.
“With stock markets almost back to record highs, commodity prices rebounding, the dollar and corporate bond yields down sharply and incoming data indicating that China’s economic growth accelerated in the first quarter, it would have been difficult for the FOMC to keep that language,” Ashworth said.
On the domestic side, the Fed stressed that labor market conditions have improved further, growth in household spending has moderated and the housing sector has improved while strong job gains point to additional strengthening of the labor market.
The Fed expects economic conditions to “evolve in a manner that will warrant only gradual increases in the federal funds rate,” and the path toward a rate hike will depend on future U.S. macroeconomic data.
Ashworth said the Fed could still increase interest rates in June and noted “the omission of the warning about global risks leaves the door open to a June rate hike.”
But that depends on what will happen in financial markets over the next six weeks, he said.
