Brexit factored in decision, may have consequences for US:Yellen

Even the liberal Atlantic admitted that was “the smallest number of jobs added in a monthly jobs report since 2010”.

“It’s as dovish as the Fed can get without actually cutting rates”.

Job growth in the U.S. slowed to just 38,000 in May, compared to the 200,000 monthly average in the first quarter of the year.

The Fed next meets in July but expectations are low for any action on interest rates. Most recently, job growth has weakened even as broader measures of economic activity have picked up.

As well as keeping rates unchanged, as was widely expected, the USA central bank simultaneously scaled back forecasts for how fast it will raise rates over the next couple of years on concerns around the economic outlook.

“This should reduce volatility and allow Treasury investors to focus on what’s coming ahead rather than devote energy to what the Fed may be doing”, Vogel noted.

The benchmark overnight lending rate stayed in the range of 0.25 – 0.5%.

In her press conference, Janet Yellen said the Federal Open Market Committee was unanimous in deciding to keep the current rates. That view was encouraged by the minutes of its previous meeting in April. They foresee the short-term rate reaching 2.4 percent by the end of 2018, still quite low by historical standards.

The Fed said slower economic growth would crimp the pace of monetary policy tightening in future years.

“The central bank considers the delay in the Fed rate hike as a chance to ease interest rates”, he said.

The possible “Brexit” is a “decision that could have consequences for economic and financial conditions in global financial markets”, Yellen said.

There were no dissents in the Fed’s rate decision on Wednesday.

Yellen said it was “not impossible” that the Fed would lift interest rates in July, which sounds like a pretty high bar.

In addition to the May jobs report, other economic barometers have also sowed doubts – from tepid consumer spending and business investment to a slowdown in worker productivity to stresses from China and other major economies.

And inflation remains below the Fed’s target.

The unemployment rate fell to 4.7 percent in May, the lowest level since 2007, and officials have pointed to signs that wages are starting to rise more quickly. Nervous investors sent markets sinking, and fears of a new recession arose.

“The fact is they still want to be in a position to hike rates, but it could be one bridge too far”. On Wednesday, the Fed released new projections showing that 15 of its 17 policymakers now expected no more than two increases this year, and six of those officials predicted just one.