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The Fed leaves benchmark interest rate unchanged

As widely expected, the Federal Reserve left its benchmark interest rate unchanged following the July meeting of its Federal Open Market Committee (FOMC), but its policy statement noted improvements in the economy that could foreshadow an increase later this year. Federal Reserve

A statement following the two-day meeting of the FOMC said that the labor market perked up in June after a disappointing May, and household spending is increasing. Business investment remains weak, however, and inflation hasn’t moved up much and continues to run below the 2 percent annual target.

Notably, the statement made no reference to international volatility or Britain's Brexit decision in June to leave the European Union, but did say the committee was watching global events. It noted that factors that have kept inflation down, such lower prices for energy and imports, have dissipated.

"The near-term risks to the economic outlook have diminished," the Fed's statement said. 

The federal funds rate will remain in the range of 0.25 percent to 0.5 percent.

The FOMC voted 9-1 to maintain the benchmark rate at its current level. Esther L. George, president and chief executive officer of the Federal Reserve Bank of Kansas City, was the lone dissenter. She wanted to raise the rate by a quarter of a percent.

Most analysts say that if the Fed raises rates this year, it is more likely to come at the September or December meetings, where FOMC Chair Janet Yellen has scheduled a news conferences to explain monetary policy. The FOMC also meets in November before the election. 


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