Federal Reserve Does Not Raise Interest Rates

Federal Reserve Does Not Raise Interest Rates

To nobody’s surprise The Federal Reserve did not raise interest rates at its June meeting.

Its statement released Wednesday June 15, 2016 showed that it expected the labor market to continue strengthening following a weak jobs report in May. That report was why, in part, the Fed held off on raising rates now. It wants to ensure that the sharp slowdown in hiring last month was temporary.

On the other leg of its dual mandate — price stability — the Fed said that it anticipates that low energy prices will continue suppressing inflation in the near term.

The Fed “continues to closely monitor inflation indicators and global economic and financial developments,” it said. Next week’s British referendum on whether the UK will stay in the European Union is central on its radar as a potential risk to the economy.

It also updated its dot plot, which shows where it thinks interest rates should be in the next few years. This showed that six Fed officials now expect one rate hike in 2016, versus just one person in March, implying an even more gradual approach to monetary-policy decisions.

In December, they raised their benchmark rate after years of unprecedented stimulus to the economy. It has not done so since and has argued that a gradual approach in response to strong economic data is best.

Read the full statement here