Fed leaves interest rates unchanged, remains upbeat on economy

Wed Feb 1, 2017 4:11pm EST
 
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By Lindsay Dunsmuir and Jason Lange

WASHINGTON (Reuters) - The Federal Reserve held interest rates steady on Wednesday in its first meeting since President Donald Trump took office, but painted a relatively upbeat picture of the U.S. economy that suggested it was on track to tighten monetary policy this year.

The U.S. central bank said job gains remained solid, inflation had increased and economic confidence was rising, although it gave no firm signal on the timing of its next rate move.

Fed policymakers are still awaiting clarity on the possible impact of Trump's economic policies.

"Measures of consumer and business sentiment have improved of late," the Fed said in a unanimous statement following a two-day policy meeting in which it left its benchmark interest rate in a range of 0.50 percent to 0.75 percent.

The Fed also highlighted that the unemployment rate, currently at 4.7 percent, was still hovering near its recent low.

Financial markets were little changed after the rate decision, while investors were still expecting the next rate increase to occur in June, according to Fed funds futures data compiled by the CME Group.

The Fed raised rates in December for only the second time in a decade and forecast three rate increases in 2017.

Fed Chair Janet Yellen recently underscored that, with the economy near full employment, the central bank risked a "nasty surprise" on inflation if it is too slow with rate hikes.   Continued...

 
Federal Reserve  Chair Janet Yellen holds a news conference following day two of the Federal Open Market Committee (FOMC) meeting in Washington, U.S. on December 14, 2016.  REUTERS/Gary Cameron/File Photo