FED maintains status quo: keeps rates unchanged

The two day long FED meet which started on June 14 has finally concluded. The FED which is chaired by the infamous Janet Yellen has kept the rate unchanged at the target range of 0.25 to 0.50 per cent. The decision of the Federal Open Market Committee to maintain the rates at an unchanged status came out on expected lines.

According to the press release by FED, the pace of improvement in the labour market has slowed since April; while growth in economic activity appears to have picked up. Although the unemployment rate has declined, job gains have diminished.

Inflation target also remained below the committee expectation at 2 per cent, partly reflecting earlier declines in energy prices and in prices of non-energy imports.

Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 per cent. The stance of monetary policy remains accommodative, thereby supporting further improvement in labour market conditions and a return to 2 percent inflation.

FED rate hike was anticipated in the June meet, before the weak US job data for the month of May was out in early June.

The worries of BREXIT are also hovering over the Federal reserve said Janet Yellen in the post policy press conference. BREXIT will have a wider repercussion on the global markets, she added. The Fed last time had a rate cut in December 2015.