FOMC Keeps Rates Unchanged, Fed Monitoring Global Economic Environment

“All in all a dovish statement pretty much taking March off of the rate hike calendar”, Gaffney said in a statement e-mailed to NPR.

Amari’s resignation, which came after Tokyo’s Nikkei stock market had closed, caused the yen to rise slightly against the dollar, with Japanese policymakers now grappling with the effects of a firmer yen and worries about a weakening global economy.

Earlier on Wednesday, the pan-European FTSEurofirst 300 index rose 0.4 per cent at 1,340.76. USA stocks were set for an uninspiring open following Wednesday’s big retreat on Wall Street, when both the main indexes fell by more than 1 percent.

The Fed late on Wednesday held its key Federal Funds rate in the range of 0.25 to 0.50 percent. Until December, they had kept that rate at record lows.

Their policy statement pointed to the mixed economic backdrop they see now. “Their aim was not to introduce new stresses into the marketplace”.

The CME Fed Fund Futures can be viewed here. Until the December FOMC meeting there had not been an increase in the Fed’s interest rate since June 2006, before the beginning of the American financial crisis.

Economic data “suggests that labor market conditions improved further as economic growth slowed late a year ago”, the Fed said.

Fed policy makers did not give updated forecasts on the path of monetary policy, but said they expected the labour market would continue to strengthen and the economy would expand even with “gradual adjustments in the stance of monetary policy”.

And while the Fed tempered its economic outlook Wednesday, it appeared to place more emphasis on a labor market that has continued to churn out well over 200,000 jobs a month.

The Fed’s decision was approved by a unanimous vote of 10-0.

U.S. stock markets fell following the Fed’s statement, with the S&P 500 falling 1.3% and the Dow Jones down 1.5%.

And, China has unnerved investors because of an economic slowdown that Beijing seems incapable of steering properly. That country’s decelerating growth has shrunk global commodity prices and the emerging market countries that have supplied them to China.

The US economy grew at an annual pace of 2% in the July-September quarter, according to the federal Bureau of Economic Analysis’ final estimate last month.

New Zealand’s central bank also chose to leave local interest rates unchanged but said more easing may be required due to low inflation. As well as weekly jobless claims, traders have figures on pending home sales and durable goods orders to digest.

Analysts note that supply in the housing market remains low, which may signal some weakness, but overall believe that this report shows strength in the housing market. After the Fed hiked interest rates in December for the first time in more than a decade, there had been widespread speculation that it would pull the trigger again in March.