Fed keeps interest rates steady, says risks to outlook ‘reduced’

Inflation expectations little changed in recent months WASHINGTON, July 27, (RTRS): The Federal Reserve left interest rates unchanged on Wednesday but said near-term risks to the US economic outlook had diminished, opening the door to a resumption of mone

The US central bank said the economy had expanded at a moderate rate and job gains were strong in June. It added that household spending also had been “growing strongly,” and pointed to an increase in labor utilization.

While Fed policymakers said they continued to closely monitor inflation data and global economic and financial developments, they indicated less worry about possible shocks that could push the US economy off course.

“Near-term risks to the economic outlook have diminished,” the Fed’s policy-setting committee said in its statement following a two-day meeting in which it left its benchmark overnight interest rate in a range of 0.25 percent to 0.50 percent. It noted, however, that inflation expectations were on balance little changed in recent months.

The Fed has held steady on rates since December, when it raised them for the first time in nearly a decade and signaled another four rate increases were in the offing for 2016.

That was scaled back to two hikes this year after Fed policymakers issued new projections in which they also lowered their longer-term growth estimates for the US economy.

Despite a strong rebound in job growth last month and an economy near full employment, most Fed policymakers had urged caution in raising rates until there was concrete progress in moving inflation toward the Fed’s 2 percent target.