The Federal Reserve held interest rates steady on Wednesday, but indicated that moderate U.S. economic growth and “strong job gains” would allow it to resume tightening monetary policy this year.
- As expected the FOMC holds the Fed Funds rate at 0.25%. The views of the members, however, have changed to more inline with that of the market – the group sees just two rate hikes this year vs. four expected at the previous projections in December.
- A range of recent indicators, including strong job gains, points to additional strengthening of the labor market.
- United States continues to face risks from an uncertain global economy even as fresh projections from policymakers showed they expected two quarter-point rate hikes by year’s end.
- Policymakers also projected weaker economic growth and lower inflation this year and lowered their estimate of where the targeted lending rate would be in the long run to 3.30 percent from 3.50 percent – a signal that the economic recovery would remain tepid.
- Stocks react : erased the S&P 500’s earlier loss to lift it 0.4 per cent on the day.
- With the Fed Funds market now slashing rate-hike expectations for the rest of the year…
- Gold :the biggest winner so far from the Fed