In a major relief to India and other developing countries, US Federal Reserve has decided not to lift interest rates to near zero for the first time in nearly a decade.
“To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate,” the Federal Reserve said in a statement after the meeting of its committee.
In determining how long to maintain this target range, the Committee will assess progress — both realised and expected — toward its objectives of maximum employment and two percent inflation, it said.
The Federal Reserve said it anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labour market and is reasonably confident that inflation will move back to its two percent objective over the medium term.
Later at a crowded news conference the Federal Reserve Chairwoman Janet L Yellen said the committee continues to anticipate that the first increase in the federal funds rate will be appropriate when it has seen some further improvement in the labour market and is reasonably confident that inflation will move back to its two percent objective over the medium term.
“The inflation outlook has softened slightly. We’ve had some further developments, namely lower oil prices, and a further appreciation of the dollar, that have put some downward pressure in the near—term on inflation. Now, we fully expect those further effects like the earlier moves in the dollar and in oil prices to be transitory, but there is a little bit of downward pressure on inflation,” she said in response to a question.
