The US Federal Reserve held interest rates steady and signalled it is still leaning towards eventual reductions in borrowing costs, but put a red flag on recent disappointing inflation readings and suggested a possible stall in the movement towards more balance in the economy.
Investors in contracts tied to the Fed’s policy rate continued to see the US central bank beginning to cut rates in November and added to bets that it will deliver at least one reduction in borrowing costs this year.“The does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably towards 2 per cent,” the Fed repeated in a unanimously-approved statement that still indicated the next move on rates will be down.
“The Committee marked to market on inflation by noting that Q1 data didn’t show the additional progress that they hoped to see, but the statement also suggested that they would not view further labor market strength through an inflationary lens,” said Omair Sharif, president of Inflation Insights.
Source: Loan Digest (loandigest.net)
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