U.S. Fed leaves rates unchanged amid leadership change
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E-mail Xinhua, February 1, 2018
The U.S. Federal Reserve on Wednesday left its benchmark interest rates unchanged as current Fed Chair Janet Yellen prepares to hand over the leadership of the central bank to Jerome Powell later this week.
The Fed decided to maintain the target range for the federal funds rate at 1.25 to 1.5 percent after its two-day meeting, while giving an upbeat assessment of recent U.S. economic growth.
"Gains in employment, household spending, and business fixed investment have been solid, and the unemployment rate has stayed low," The Federal Open Market Committee (FOMC), the Fed's policy-making committee, said in a statement.
The Fed also expected U.S. inflation on a 12- month basis to "move up this year and to stabilize" around the central bank's 2 percent target over the medium term.
The Fed's preferred measure for inflation rose 1.7 percent in December from a year earlier, according to the latest data released by the Commerce Department.
Analysts said the stronger economic growth and a pickup of inflation could set the stage for an interest rate increase in the Fed's next policy meeting scheduled on March 20-21.
Futures prices for the federal funds rate also suggest that investors currently see the probability of the next rate hike in March around 80 percent.
Wednesday marked the last policy meeting under Yellen's four-year leadership as her term expires on Feb. 3.
The FOMC said in a separate statement Wednesday that it unanimously elected Powell as its chairman, effective on Saturday. He is expected to be officially sworn in as the next Chairman of the Fed's Board of Governors on Monday.
Powell, who has been a member of the Fed's Board of Governors since 2012, was nominated by President Donald Trump in November to succeed Yellen. He will be the first Fed Chair without a Ph.D. in economics since 1980s.
Market participants widely expected that Powell's Fed would ensure the continuity of gradual tightening in the monetary policy while easing regulatory burdens on some financial institutions.
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