Federal Reserve remains "patient" and holds rates in wake of strong growth

Guy Bentley
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The Federal Reserve has held interest rates at 0.25 per cent and reiterated that it would remain "patient" when considering a rate hike. The decision was unanimous.

It is now unlikely the Fed will raise rates before the middle of the year.

The US central bank pointed to strong growth in the economy and upbeat employment data as reasons for optimism. The Fed expects inflation to reach the two per cent target after factors such as the falling price of oil pushed inflation down.

The Fed used the word "patient" back in December where the chairman Janet Yellen added that she didn't expect rates to rise for at least the next two meetings.

Sebastien Galy of Societe Generale commented:

If incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated

Earlier this month, the Fed said falling oil prices should give another boost to the economy, despite the damage being caused to US oil and gas producers.

Minutes from the Federal Open Markets Committee’s meeting said:

Several [policymakers] indicated they expected slower economic growth abroad to negatively affect the US economy, principally through lower net exports, but the net effect of lower oil prices on US economic activity was anticipated to be positive

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