Federal Reserve keeps interest rates unchanged
28 July, 2017, 12:00 am
THE Federal Reserve kept interest rates unchanged yesterday and said it expected to start winding down its massive holdings of bonds “relatively soon” in a sign of confidence in the US economy.
The Fed kept its benchmark lending rate in a target range of 1.00 per cent to 1.25 per cent, as expected, and said it was on track to continue the slow path of monetary tightening that has lifted rates by a percentage point since 2015.
In a statement following a two-day policy meeting, the US central bank’s rate-setting committee indicated the economy was growing moderately and job gains had been solid.
It also noted that both overall inflation and a measure of underlying price gains had declined — trends which have worried some policymakers — but that it expected the economy to continue strengthening.
“The committee expects to begin implementing its balance sheet normalisation program relatively soon,” the Fed said, adding that it would follow a plan outlined in June to trim its holdings of US Treasury bonds and mortgage-backed securities.
US stock prices rose after the release of the policy statement while yields on US Government debt fell.
The dollar dropped against a basket of currencies.