The Federal Reserve held interest rates steady on Wednesday and cut the expected pace of future monetary policy tightening as a weak global economy continued to weigh on policymakers despite ongoing U.S. growth and a healthy labor market.
A moderate economic expansion and "strong gains" would make it appropriate to hike rates over the year, the U.S. central bank said in a policy statement. Fresh projections showed a majority of its policymakers were comfortable with two quarter-point rate hikes by year's end, half the number seen in December.
But Fed Chair Janet Yellen later stressed the uncertainty surrounding that outlook, noting that even recent signs of strengthening inflation needed to be proven to be more than a passing trend.
"I am wary and have not yet concluded that we have seen a significant uptick that will be lasting," Yellen said in a press conference following the conclusion of a two-day policy meeting.
Overall, "you have seen a shift in most participants' path of policy. That largely reflects a somewhat slower projected path for global growth," Yellen said. "The U.S. economy has been very resilient in the face of shocks ... That is important."
Although there was no rate hike this month the US Dollar was sold off and gold was pushed to higher ground. We now need to watch for when the Fed will introduce the 2 hikes that is has just mentioned.
Bearing in mind that the plan was for 4 hikes, one wonders if the Fed really has a clue about what they are doing.
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