Fed stays on course for September rate increase

Fed gives bullish assessment of the economy following its latest two-day meeting

The Federal Reserve  described a range of economic indicators as “strong”. Photograph: Reuters

The Federal Reserve described a range of economic indicators as “strong”. Photograph: Reuters

 

The Federal Reserve stayed on course for a further increase in short-term interest rates as soon as next month as it highlighted the strength of America’s economic expansion alongside inflation that is hovering close to its target.

The US central bank held the target range for the federal funds rate at 1.75 to 2 per cent, as widely expected by economists, in a unanimous decision by its policymakers. The Fed gave a bullish assessment of the economy following its latest two-day meeting, describing a range of economic indicators as “strong”.

The Fed was an early mover in beginning to pull back its post-crisis stimulus, but it has been joined by other major central banks: the European Central Bank is pencilling in an end to its quantitative easing programme at the end of the year, while the Bank of England mulls another rate increase.

The Bank of Japan stood as the exception this week, pledging to maintain extremely low rates, although it also jolted bond traders by introducing extra flexibility into its stimulus programme. – Copyright The Financial Times Limited 2018