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Fed raises concerns on growth and keeps interest rates steady

Wall street retreats: Specialist Anthony Matesic works on the floor of the New York Stock Exchange on Wednesday, when U.S. markets fell after the Federal Reserve issued a cautious economic outlook. The Dow Jones Industrial Average tumbled 222.77 points, or 1.4 percent, to close at 15,944.46, the Standard & Poor’s 500 index lost 20.68 points, or 1.1 percent, to 1,882.95, and the Nasdaq composite dropped 99.50 points, or 2.2 percent, to 4,468.17.
Wall street retreats: Specialist Anthony Matesic works on the floor of the New York Stock Exchange on Wednesday, when U.S. markets fell after the Federal Reserve issued a cautious economic outlook. The Dow Jones Industrial Average tumbled 222.77 points, or 1.4 percent, to close at 15,944.46, the Standard & Poor’s 500 index lost 20.68 points, or 1.1 percent, to 1,882.95, and the Nasdaq composite dropped 99.50 points, or 2.2 percent, to 4,468.17.
Published Jan. 28, 2016

WASHINGTON — The Federal Reserve said Wednesday that domestic economic growth slowed in the final months of 2015 and pointed to increased concern about the weakness of the global economy.

In a statement published after a two-day meeting of its policymaking committee, the Fed, as expected, left its benchmark interest rate unchanged and said it still expected to increase that rate "gradually" in the coming months as economic conditions improve.

But the statement suggested the Fed's confidence in the economic outlook has deteriorated since December, when the central bank raised its benchmark rate for the first time since the financial crisis.

The Fed noted the strength of some economic measuring sticks, including continued job growth, more spending by businesses and consumers, and the revival of the housing market.

It removed language, however, describing the chances of faster and slower growth as "balanced." Instead, it said "economic growth slowed late last year," and it suggested there was now more risk to the downside.

"The committee is closely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation, and for the balance of risks to the outlook," it said.

The decision to hold rates steady, in a range between 0.25 and 0.5 percent, was unanimous among the 10 voting member of the Federal Open Market Committee. The Fed said all members were able to attend the meeting in person despite the weekend snowstorm in Washington.

Many analysts still expect the Fed to raise rates at its next meeting, in March, but a growing number argue that the Fed's concerns may push back the next rate increase to the summer months, or later.

Janet Yellen, the central bank chair, said at a news conference after the announcement that "the economic recovery has clearly come a long way, although it is not complete."

But economic growth has not gained momentum in the new year. Equity markets have fallen sharply, erasing wealth and weighing on confidence, while the dollar continues to strengthen, limiting the demand for U.S. exports.

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