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The Fed stands pat on interest rates

As widely expected, the Federal Reserve kept the benchmark interest rate unchanged at the conclusion of the April meeting, and didn't signal when a next rate hike will come.

Citing the continued low levels of inflation, the Federal Open Market Committee (FOMC) announced it would keep the federal funds rate in the range of 0.25 to 0.5 percent.

The primary sticking point is that the inflation rate is running below the desired 2 percent level, the FOMC statement said. The FOMC also noted that business fixed investment and net exports have been “soft.”

The FOMC expects to make gradual increases in the rate as economic conditions evolve, but that the federal funds rate could remain below the long-run levels "for some time," its statement says.  

The decision came as no surprise. 

"No one had anticipated that the Fed would raise rates at this meeting," said Mike Fratantoni, chief economist for the Mortgage Bankers Association, in a report. "Rather, we and others had expected somewhat more of a signal that they would be increasing rates again in June. Odds of a June have decreased a bit, but we expect that is still the most likely outcome."  

Fratantoni said that the FOMC statement recognized improvements in the job market and global conditions, but expressed more caution about  the pace of the economy's growth.

"The Fed continued to express concern regarding the low rate of inflation, and highlighted that they will be watching inflation indicators over the next few months very closely," Fratantoni said.  

The vote was 9-1 in favor of standing pat. Esther L. George, president and chief executive officer of the Federal Reserve Bank of Kansas City, was the lone dissenter. She sought to hike the rate by 0.25 percent.

The Fed raised the benchmark rate in December off near zero, the first increase in nearly a decade. 



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