1st LD Writethru: U.S. Fed keeps patient in interest rate hike
Xinhua, January 29, 2015 Adjust font size:
The U.S. Federal Reserve on Wednesday repeated that it keeps patient in beginning to normalize the stance of monetary policy.
Despite the weak global growth, the Fed said the economic activity in the U.S. has been expanding at a solid pace, compared to the wording of "at a moderate pace" in its December statement.
In a statement released after a two-day meeting of its Federal Open Market Committee (FOMC) on Wednesday, the Fed dropped a clause from its December statement that the assurance of patience was consistent with its previous pledge to keep rates near zero for a "considerable time". The Fed has kept its benchmark short- term rate near zero since December 2008.
In determine how long to maintain the rate at current level, the Fed said it will take into consideration of labor market conditions, inflation pressures and expectations, and financial and international developments. In its December statement, the Fed did not include "international developments" in the clause.
In December, the Fed chair Yellen said the reference to patience means the central bank is not likely to raise rates at its next two policy meetings. Many Fed officials have pointed to a possible rate increase around mid-year.
Although the market has worried the weak global growth will weigh on the U.S. economy, the Fed said in the statement that "the economic activity has been expanding at a solid pace", an upgrade from "moderate pace" in its previous statement. Moreover, it noted job gains were "strong", compared to "solid gains" in December statement.
The central bank acknowledged inflation had declined further below its 2 percent target and that market-based measures of inflation had declined substantially, a more negative assessment than in December.
But the Fed expected inflation to rise gradually toward its 2 percent target over the medium term as the labor market improves further and the transitory effects of lower energy prices and other factors dissipate. Endite