US Federal Reserve leaves interest rates unchanged

Experts think that a steadily improving job market is giving households more income to spend, helping business activity.

In determining how long to maintain this target range, the FOMC will assess progress – both realized and expected – toward its objectives of maximum employment and 2 percent inflation. Treasury prices were largely unchanged after the Fed statement. U.S. The few modifications suggested a healthier economy.

The Federal Reserve for the first time spoke about solid jobs gains and declining unemployment.

Kathy Bostjancic of economic forecasting firm Oxford Economics agreed that Fed officials “only need to see “some” further improvement in the labor market”. He expects that to occur in September.

“[It] said little to change market perceptions of 50-50 odds on the first hike occurring in September”, ANZ Bank said. The economy expanded at a 2.3 percent annual rate in the second quarter, confirming Fed Chair Janet Yellen’s view that a slump early in the year was transitory.

Inflation has been the second condition for raising the rate. It is imperative to state that any hike in interest rates other rates like mortgage, auto loans and corporate borrowing could follow suit and start rising.

“In my mind, the Fed is very comfortable with a slow, deliberate pace”, said Brian Bethune, an economics professor at Tufts University in Boston.

Stock investors responded positively.

At 11:12 a.m. ET (1512 GMT) the Dow Jones industrial average was down 66.34 points, or 0.37 percent, at 17,685.05, the S&P 500 was down 8.72 points, or 0.41 percent, at 2,099.85 and the Nasdaq Composite was down 23.00 points, or 0.45 percent, at 5,088.73.

An increase was not expected at this week’s meeting, as recent data, while good, has not been strong enough to completely convince FOMC members that the economy is ready for it. “We are in for a longish, positive market”, he said.

Analysts highlighted the inclusion of the word “some” in the Fed’s assessment that it would be appropriate to raise rates “when it has seen some further improvement in the labor market”.

Low interest rates have been detrimental to banks and lenders, as they’ve been pushed to dole out loans at low rates. Pay growth remains generally sluggish, for example, and many people are working part time because they can’t find full-time jobs.

The Fed hasn’t raised rates in almost a decade. “But as it is dealer’s pricing and can recover quickly, I would say it will move sideways until something happens of a more significant nature”.

The U.S. unemployment rate fell to 5.3 percent in June, its lowest level since April 2008, shortly before the onset of the Great Recession.

Bullion is set for a 7.4 per cent plunge this month, the most since June 2013, after tumbling to the lowest level since 2010 last week.