Federal Reserve to maintain ultra-low rates amid ‘solid’ U.S. growth

The Federal Reserve took the extraordinary action of lowering interest rates to near zero in a bid to stabilize the U.S. economy (Reuters/Stock image)

The Federal Reserve on Wednesday said it would remain "patient" on raising ultra-low interest rates for the first time since 2006, saying the economy was growing at a "solid pace."

Wrapping up a two-day monetary policy meeting, the Federal Open Market Committee left unchanged the key federal funds rate near zero, where it has been pegged since late 2008, as widely expected.

The Federal Reserve took the extraordinary action of lowering interest rates to near zero in a bid to stabilize the U.S. economy after it was it by the financial crisis, which started in 2007

In a statement the reserve’s policy arm – the Federal Open Market Committee announced: “The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced. Inflation is anticipated to decline further in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of lower energy prices and other factors dissipate. The Committee continues to monitor inflation developments closely.

“To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress - both realized and expected - toward its objectives of maximum employment and 2 percent inflation.”

The crisis was the most intense period of global strains experienced since the Great Depression of the 1930s when the stock market crashed.

Low interest rates help households and businesses finance new spending and help support the prices of many other assets, such as stocks and houses.

The Federal Reserve is responsible to making decisions that aid the economy and maximize employment.

(With agencies)

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Last Update: Wednesday, 20 May 2020 KSA 09:44 - GMT 06:44
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