Federal Reserve policy makers unexpectedly dropped a commitment to hold interest rates low “for a considerable period” while voting to keep the benchmark US interest rate at 1 per cent. Treasury prices fell.
The Federal Open Market Committee (FOMC) said it still can be “patient” in holding down borrowing costs, a language change that some investors said may show a rate increase will happen sooner than they expected. The FOMC voted unanimously to leave the overnight bank-lending rate at the lowest since 1958, according to the statement after its two-day meeting.
“With inflation quite low and resource use slack, the committee believes that it can be patient in removing its policy accommodation,” the statement said. The Fed said “output is expanding briskly” and “new hiring remains subdued,” while other indicators “suggest an improvement in the labour market.”
