US: Fed says business optimism improved; no rate hike
‘Measures of consumer and business sentiment have improved of late,’ the bank said
By Ovunc Kutlu
NEW YORK
The Federal Reserve kept its interest rate unchanged Wednesday while stressing improved business optimism, it announced in a statement after concluding its two-day January meeting.
"Measures of consumer and business sentiment have improved of late" while job gains have remained solid and labor market has continued to strengthen since the Fed's last meeting on December 14, according to the statement.
Economic activity continued to expand "at a moderate pace” and the unemployment rate stayed at its recent low level of 4.7 percent, while household spending continued to increase, it added.
The bank, however, did not indicate in its statement when its next rate hike would come this year.
The Fed increased its benchmark interest rate 25 basis points in December to 0.50 - 0.75 percent range, and said it forecasts three rate hikes this year.
The forecast, however, may prove difficult to achieve since President Donald Trump wants to increase American exports, and to accomplish that he needs interest rates to remain low.
"... the Fed will remain in wait and see mode until it gets more clarity on the size, composition and timing of the fiscal stimulus being planned by the Trump administration," Paul Ashworth, chief U.S. economist at London-based Capital Economics, said in a note.
