Fed opts not to hike benchmark interest rate
Central bank governors cite sputtering labor market, low inflation pressure
The Federal Reserve decided not to raise the fed-funds rate following its meeting Wednesday, with chair Janet Yellen citing “headwinds blowing on the economy.”
The central bank’s governors also signaled slower rate hikes to come, and lowered their forecast of U.S. economic growth. The Fed now anticipates growth of 2 percent in 2016, down from earlier projections of 2.2 percent, according to a new release.
Fed governors’ average predictions still point to two more rate hikes this year, but a larger number of governors than previously predicted there could be just one increase.
“We need to assure ourselves that the underlying momentum in the economy has not diminished,” Janet Yellen said at a press conference.
The non-action was largely as expected. Last month, three Fed officials known for their mainstream views suggested it was moderately likely the bank could raise rate, but that was before the Bureau of Labor Statistics released last month’s surprisingly weak employment data. — Ariel Stulberg