The FOMC ended its two-day monetary policy meeting on Wednesday and agreed to keep its benchmark interest rate unchanged at a record low between 0.0% and 0.25%, while the FOMC`s statements had not seen any changes. However, fifteen to nineteen FOMC officials see the first increase in interest rate would be after 2014.
The Federal Reserve said the U.S. labor market is showing ‘further improvement.
The Fed also left its statement unchanged, as it plans to hold its target interest rate near zero as long as unemployment remains above 6.5 percent and inflation is projected to be no more than 2.5 percent.
The Committee decided to keep the target range for the Federal funds rate at 0 to1/4 percent, and the Committee anticipates that this extraordinary low range for the rate will be appropriate as long as the unemployment rate remains above 6.5 percent.
The Federal Reserve continues to fuel the U.S. economy under accommodative monetary policies, as its benchmark interest rate is expected to remain at its current record low until mid 2015, after extending and intensifying its quantitative easing program in late 2012. Note that the Fed`s rate was last reduced at September 2012.
The Federal Reserve also maintained its monthly $85 billion of bond purchases, with the U.S. economy and particularly its labor market are recovering. The Fed said that the purchases will continue until “the outlook for the labor market has improved substantially in a context of price stability” and that it will continue to reinvest maturing securities.
Statement
The economy is growing, the labor market is improving and inflation is nothing to worry about. That`s the Federal Reserve`s widely-anticipated assessment of the economy, released Wednesday after a two-day meeting.
The Fed said it would keep interest rates at historic lows near zero and that it would continue its bond buying program, known as quantitative easing, aimed at keeping the central bank`s pedal to the metal on stimulating growth.
The statement gave no indication that it would be scaling back the program, despite intense market speculation that it could start drawing it to a close.
“The Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate,” the Fed said in a statement after its meeting.
After a powerful rally earlier in the week, markets recoiled at Wednesday`s news.
Stocks sold off while Treasury yields rose.
Markets have been intent on finding signs for when the Fed will end its quantitative easing program, which has driven the central bank balance sheet to $3.45 trillion and sparked worries about asset bubbles in risk assets.