Fed holds off on key interest rate hike
WASHINGTON — The Federal Reserve is keeping its key interest rate unchanged but signaling that it will likely raise rates before year’s end.
The Fed said in a statement ending its latest policy meetingWednesday that the U.S. job market has continued to strengthen, and economic activity has picked up. But it noted that business investment remains soft and inflation too low, and that it wants to see further improvementin the jobmarket.
The central bank called the near-term risks to its economic outlook “roughly balanced.” It was the first time it has used thatwording since late last year, when it most recently raised rates.
The Fed said its policy committee had concluded that while “the case for an increase in the federal funds rate has strengthened,” it would, for the time being, “wait for further evidence of continued progress toward its objectives.”
In her news conference, Chairwoman Janet Yellen offered a simple explanation for why the Fed didn’t raise rates.
“The economy has a little more room to run than previously thought,” she said.
The Fed’s next meeting is aweek before theNovember elections, and most analysts think it wouldn’t want to raise rates so close to when voters go to the polls. That’s why the last meeting of the year in December is seen as the most likely time for the next rate hike, as long as the economy keeps improving in line with Fed expectations. Federal Reserve Chairwoman Janet Yellen makes case for not raising interest rates Wednesday inWashington.