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Montevideo, November 17th 2018 - 14:01 UTC

Federal Reserve leaves rate unchanged but December hike is expected

Friday, November 9th 2018 - 08:45 UTC
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The Fed kept its benchmark rate in a range of 2% to 2.25%. It said US economy was robust, with healthy job growth, low unemployment, solid consumer spending The Fed kept its benchmark rate in a range of 2% to 2.25%. It said US economy was robust, with healthy job growth, low unemployment, solid consumer spending

The Federal Reserve has left its key policy rate unchanged but signaled that it plans to keep responding to the strong U.S. economy with more interest rate hikes. The next rate increase is expected in December.

The Fed kept its benchmark rate in a range of 2% to 2.25%. A statement issued on Thursday after its latest policy meeting portrayed the United States economy as robust, with healthy job growth, low unemployment, solid consumer spending and inflation near the Fed’s 2% target.

Despite a U.S. trade war with key nations, weaker corporate investment and a sluggish housing market, the Fed is showing confidence in the economy’s resilience. To help control inflation, it has projected three rate increases in 2019 after an expected fourth hike of the year next month.

Analysts saw the central bank’s decision to highlight the economy’s strength and to make few changes in its policy statement as a sign that it remains on track to raise rates next month.

The Fed’s decision Thursday was approved 9-0 by its voting policymakers. Its brief statement was nearly identical to the one the Fed issued in September. It said the job market has continued to strengthen and noted that economic activity has been rising “at a strong rate.”

In one of its few changes, the Fed downgraded its assessment of business investment spending, observing that it had slowed from its pace earlier in the year.

The Fed did not specify any risks to the economy it perceives. Analysts will be studying the minutes of this week’s meeting, to be released in three weeks, for any insight into economic threats Fed policymakers may see, such as the trade war between the United States and China.

In deciding how fast or slowly to keep raising rates, the Fed will be monitoring the pace of growth, the job market’s strength and gauges of inflation for clues to how the economy may evolve in the coming months. The brisk pace of economic growth — a 3.5% annual rate in the July-September quarter, after a 4.2% rate in the previous quarter — has raised the risk that inflation could begin accelerating.

Categories: Economy, United States.

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