US Federal Reserve decided to keep Interest Rates unchanged

Mar 18, 2016 08:10 IST

Federal Open Market Committee of US Federal Reserve on 16 March 2016 release an implementation note with a decision to maintain the target range for the federal funds rate at 0.25 to 0.5 percent.

The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.

And it also decided to maintain its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. It anticipates doing so until normalization of the level of the federal funds rate is well under way.

The US central bank last raised rates in December 2015, saying it expected to raise rates four times in the year 2016 but at present it expects to raise rates just twice.

Background

The Committee met in January 2015 and suggested that economic activity has been expanding at a moderate pace despite the global economic and financial developments of recent months. Household spending has been increasing at a moderate rate, and the housing sector has improved further; however, business fixed investment and net exports have been soft.

A range of recent indicators, including strong job gains, points to additional strengthening of the labor market. Inflation picked up in recent months. However, it continued to run below the Committee's 2 percent longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports.

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