Fed announces no hike in interest rates

The US economy has hinted at a hike in Dec

The Dollar Business Bureau 

The two-day Federal Reserve meeting concluded with an unchanged rate of interest with the policy-makers hinting at an expected surge in the month of December. This was the last decision by the reserve before the US elections slated for November 8. The policymakers also observed that inflation was moving towards their expected target of 2%.

The Federal Reserve said that the US economy is becoming better, thus allowing interest rates to rise soon and lead to a strengthening case of more expensive loans. This was apparently not good news for some investors who sold off stocks after the release of the statement.

Though the labor market witnessed a modest pace of growth in the first half of 2016, the same has been consolidated with a continued growth in economic activity. This was supported by the fact that the country has had major job gains followed by moderate rise in household spending.  

According to a statement issued by Fed, the committee judges want to wait for some further evidence of continued progress towards fulfilling their objectives of a high rate of interest.

The decision has been taken by the Federal Open Market Committee, led by Chair Janet Yellen, who decided to leave the rates unchanged for the seventh consecutive meeting, a move which was countered by two committee members.

The move has led to US stocks extending earlier losses along with the coming down of Treasury yields. 

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The Dollar Business Bureau - Nov 03, 2016 12:00 IST