Federal Reserve Holds Rates, Says US Growth Slowed


Washington: The Federal Reserve said economic growth in the US slowed late last year as it kept its benchmark interest rate unchanged on Wednesday after December’s historic hike.

In a short policy statement, the US central bank hinted at some concern with global market turbulence and sluggish growth.

However, it said it still expected that inflation, weakened in the short term by the oil price crash, would push toward its goal of 2.0 per cent in the medium term.

The US central bank left the door open for a second rate increase in March, even as markets increasingly discount the likelihood.

“Information received since the Federal Open Market Committee met in December suggests that labor market conditions improved further even as economic growth slowed late last year,” the Federal Open Market Committee (FOMC) said at the end of a two-day meeting.

“The committee is closely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation, and for the balance of risks to the outlook.”

Wall Street erased gains and fell after the Fed statement, as the US central bank failed to satisfy investors hoping for a stronger sign it might scale back future interest rate hikes.

At 1422 EST (12:52 a.m. in India), the Dow Jones industrial average was down 0.39 per cent at 16,104.09 points while the S&P 500 had lost 0.05 per cent to 1,902.7 and the Nasdaq Composite dropped 0.92 per cent to 4,525.71.