WASHINGTON (Reuters) – The US Federal Reserve kept interest rates stable on Thursday, but remained on track to gradually maintain borrowing costs, as it indicated a healthy economy that was only damaged by the growth of business investment.
PHOTO FILE: The Federal Reserve headquarters in Washington on September 1
Business investments can be a key to increasing productivity and future growth and the fact that he was "moderated" by his rapid pace, "as the Fed said, was the only caution in a policy statement that promoted strong job gains and family spending, and a" strong rate " "of overall economic activity.
" The labor market has continued to strengthen and … economic activity has grown at a strong rate, "said the US central bank, leaving intact his plans to continue raising rates at a gradual pace The Fed has raised rates three times this year and is expected to do so again in December.
The general statement reflected few changes in perspectives of the Fed p and the economy since his last political meeting in September. Inflation remained close to its 2% target, unemployment decreased and risks to the economic outlook were still perceived as "approximately balanced".
Policymakers, however, have noted moderation in corporate investment, an important component of GDP that can complete jobs as companies build new structures and increase productivity as they upgrade equipment and processes.
The strengthening of investments was one of the main objectives of the Trump administration's action to reduce the corporate tax rate as part of its restructuring of the tax code at the end of 2017
After adding four tenths of a percentage point to economic growth in the first six months of the year, the delay in investments in "non-presidential structures" decreased by a quarter of a percentage point in the annualized growth rate for the third quarter.
Financial markets, which expected the Fed to maintain the stable overnight loan rate in the current range of 2.00 percent to 2.25 percent this week, fell after the statement was made known.
After a stock market crash in October and signs that real estate and housing investment may be falling, some analysts had expected the Fed to signal doubts about its next rate hike.
Yet December still seems to be firmly at stake.
"The only surprise here is that they were no longer aggressive," said Boris Schlossberg, managing director of the BK Asset Management exchange strategy in New York. "There were a couple of words that were more subdued – that business investment had been" moderated "by the previous pace, but other than that they did not signal any warning signal."
U.S. the actions, which largely gathered on Wednesday after the results of the US Congress elections, became lower as the Fed's statement showed no indication that the central bank could slow down the pace of its rate hikes.
The dollar also weakened against the euro and the yen and US Treasury yields held close to the day's high. The yield on 10-year Treasury securities, a benchmark for borrowing costs for both consumers and businesses, was 3.23%, the highest since 2011.
published at the end of October showed that the US economy grew 3.5% annual rate in the third quarter, well above the annual growth rate of about 2% of the Fed and many economists consider the underlying trend.
But policymakers at the Fed also began to discuss whether the economy reached a plateau when the stimulus of the trumpet tax cuts package of the Trump administration and the increase of federal spending begin to fade.
The Fed's policy statement did not explicitly take into account the recent volatility of US equity markets that led to the selloff in October, or face the possibility of a slowdown in global growth next year.
There were no updated economic forecasts published Thursday and Fed Chair Jerome Powell was not scheduled to hold a press conference.
The Fed's political decision was unanimous.
Report by Howard Schneider, Jason Lange and Dan Burns; Editing by Paul Simao