The Federal Reserve steered a cautious path towards a further interest rate increase as soon as next month, as Janet Yellen spends what could be her final months as Fed chair balancing evidence of a resilient economy against doggedly weak inflation.
With Donald Trump expected to announce his nominee for Fed chair on Thursday, the central bank kept the key rate at 1 to 1.25 per cent at the end of the Federal Open Market Committee’s latest two-day meeting. The Fed continued to signal that “gradual” rate rises lie ahead, even if it did not offer any explicit indications as to when the next move will come.
While high petrol prices associated with the recent hurricanes had boosted some prices, “inflation for items other than food and energy remained soft,” the central bank said. On the upside, it noted that the labour market had continued to improve and “economic activity has been rising at a solid rate despite hurricane-related disruptions.”