US Fed keeps key interest rate steady

Job market rebounded in June after slump in May, officials say

The Federal Reserve is keeping interest rates unchanged while noting that near-term risks to the economy have diminished.

The Fed said yesterday that the US job market has rebounded, with strong job gains in June after a slump in May. But it said in a statement after its latest policy meeting that it still plans to monitor global economic threats and financial developments to ensure that they don’t slow the economy.

The central bank gave no hint of when it might resume the rate hikes it began in December, when it raised its benchmark rate from a record low. Some economists think a hike is possible in September, if hiring remains solid and the turbulence that followed Britain’s vote to leave the European Union continues to stabilise.

The decision to leave its key rate unchanged in a range of 0.25 per cent to 0.5 per cent was approved on a 9-1 vote.

Esther George, the president of the Fed’s Kansas City regional bank, dissented for the third time this year, arguing for an immediate quarterpoint rate hike.

The more positive tone in this statement, compared with the previous statement in April, will likely raise expectations that the central bank could be ready to boost rates at it September meeting if the economy keeps improving.

“Near-term risks to the economic outlook have diminished,” the Fed said.

But it repeated a previous pledge to “continue to closely monitor inflation indicators and global economic and financial developments.”