Fed holds off on interest rate hike
Fourth Estate Staff
Washington, DC, United States (4E) – The interest rate will remain at zero due to low inflation, uncertain global growth and financial-market turmoil, the Federal Reserve announced on Thursday.
The Federal Open Market Committee ( FOMC ) will wait for further improvement in the labor market before making a move in rates, Federal Reserve Chairwoman Janet Yellen said during a press conference.
Voting for the FOMC monetary policy action were Janet L. Yellen , chair; William C. Dudley, vice chairman; Lael Brainard ; Charles L. Evans; Stanley Fischer; Dennis P. Lockhart; Jerome H. Powell; Daniel K. Tarullo ; and John C. Williams. Jeffrey M. Lacker voted against the monetary policy action preferring to raise the target range for the federal funds rate by 25 basis points.
The Federal Reserve has left short-term interest rates at zero to 0.25 percent range since December 2008.
Labor market indicators show that underutilization of labor resources has diminished since early this year, according to the committee.
The panel was not convinced inflation will move gradually back to their 2 percent target, despite unemployment in August falling to 5.1 percent, its lowest level since April 2008.
“Inflation has continued to run below the Committee’s longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports,” the panel also said in a press statement.
“The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction,” the committee further said. “This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.”