Federal Reserve keeps key rate unchanged but hints of coming hike
The Fed made clear in updated forecasts it issued Wednesday that it expects growth to remain tepid for at least three years.
The Fed made clear in updated forecasts it issued Wednesday that it expects growth to remain tepid for at least three years.
U.S. factory output fell, consumers cut back at retailers and wholesale prices went nowhere in August, the latest evidence of a less-than-robust economy.
Federal Reserve Chairwoman Janet Yellen sketched a generally upbeat assessment of the economy in a speech to an annual conference of central bankers in Jackson Hole, Wyoming.
The central bank gave no hint of when it might resume the rate hikes it began in December, when it raised its benchmark rate from a record low.
The Fed is expected to issue a statement that acknowledges the strengthening economy without providing much explanation about when the next rate hike might occur.
Federal Reserve Chairwoman Janet Yellen said Tuesday that the U.S. economy faces numerous uncertainties that compel the Fed to proceed cautiously in raising interest rates.
The Federal Reserve noted after its latest policy meeting that the pace of job growth has slowed even as the overall economy has improved.
The minutes of their most recent meeting in late April show that Federal Reserve officials widely felt it would be appropriate to raise rates at their June 14-15 meeting as long as hiring and economic growth further strengthened.
With the global economy struggling and U.S. inflation still below the Fed's target rate, many economists see little likelihood of a rate increase even before the second half of the year.
Fed officials expect to raise rates more gradually this year than they had envisioned in December. The officials now foresee two, rather than four, modest increases in their benchmark short-term rate during 2016.
Most Fed watchers think the central bank wants more time to assess the financial landscape. Resuming its rate hikes too soon could slow growth or rattle investors again.
Federal Reserve Vice Chairman Stanley Fischer said Monday that inflation in the U.S. may be starting to tick up from too-low levels, a key condition for further interest rate hikes.
Six weeks after it raised interest rates from record lows, the Fed took stock of a more perilous international picture that could alter its plans for further raising rates.
Shortly after the Fed's announcement, major banks began announcing that they were raising their prime lending rate from 3.25 percent to 3.50 percent. The prime rate is a benchmark for some types of consumer loans such as home equity loans.
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Federal Reserve Bank of St. Louis President James Bullard said the Fed is “going to return to an era where there is a bit more uncertainty about what the committee is going to do, meeting to meeting.”
Federal Reserve Chairwoman Janet Yellen and New York Fed President William Dudley said the central bank could boost interest rates as soon as next month, while Fed Vice Chairman Stanley Fischer voiced confidence that inflation isn’t too far below the goal.
The Fed offered little clarity on the likely timing of a rate hike. Some Fed officials have signaled a desire to raise rates before year's end. But tepid economic reports have led many analysts to predict no hike until 2016.