Interest rates will remain at historic lows for the time being as the Federal Reserve finished a two-day meeting without announcing a shift in policy.
Employing the same language used at its previous gathering, the Fed’s rate-setting board said it will continue to be “patient” when it comes to raising rates, while signaling that they see a rising danger excessively low inflation, noting that U.S. inflation remains well below the 2 percent target rate even as the American economy has shown strong growth in recent quarters.
Keeping overall prices down have been the plunge in global oil prices and a rising dollar, which has made imported goods relatively cheaper for U.S. consumers.
The Fed board “judges that it can be patient in beginning to normalize the stance of monetary policy,” officials said, in the key phrase from their January two-day meeting.
The Fed has kept borrowing rates at nearly zero since the Great Recession of 2008-2009, in hopes of spurring more lending and economic growth. With the U.S. jobless rate down to 5.6 percent and the GDP steadily growing, there has been widespread expectation in the market that the Fed would be forced to raise those rates sometime this year, perhaps as early as June. Wednesday’s language about the risk of too-low inflation already has some forecasters saying the rate hike may be postponed beyond that.
Fed Chair Janet Yellen did not meet with reporters after the meeting, leaving investors and policymakers to divine the central bank’s plans from the statement.
The vote in favor of standing pat was 10-0, but that might set up an even more intense debate at the upcoming March meeting.
• David R. Sands can be reached at dsands@washingtontimes.com.
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