U.S. Fed keeps rate unchanged

Reserve repeats prediction of future growth

WASHINGTON— The U.S. Federal Reserve is pledging to closely monitor developments in the global economy and financial markets, while keeping a key interest rate unchanged.

The Fed said Wednesday that economic growth has slowed since it raised rates from record lows in December.

The changes in a statement it issued after its latest policy meeting signalled that the Fed could be prepared to slow future rate hikes if financial market losses and global weakness do not abate.

It repeated language it used last month that it foresees gradual rate increases in the future. Some economists say they now expect just two slight rate increases during 2016.

The policy-makers left their benchmark rate unchanged in a range of 0.25 per cent to 0.5 per cent. For seven years until December, they had kept that rate at record lows near zero.

The Fed’s statement comes against a more perilous global backdrop. Since the Fed raised rates Dec. 16, stock markets have plunged, oil prices have skidded and China’s leaders have struggled to manage a slowdown in the world’s second-biggest economy.

The Fed’s latest statement, issued after a two-day meeting, included no specific timetable for rate increases. But the changes it made in describing current economic conditions signalled that the Fed may be prepared to put its credit tightening on hold until it sees greater signs that the markets and the economy are stabilizing.

While the December statement said the U.S. economy was expanding at a “moderate pace,” policy-makers changed their language to note that “economic growth slowed late last year.”

The previous statement also described risks to the outlook as “balanced.” That description was dropped Wednesday. In its place, the Fed said it was “closely monitoring global economic and financial developments and is assessing their implications for the labour market and inflation and for the balance of risks to the outlook.”