Contrary to market expectations, the US Federal Reserve decided not to start the tapering of its $85-billion bond buying programme. Instead, it expressed the view that the rise in longer-term rates in recent months, if sustained, could slow the pace of improvement in the economy and the labour market.
In key economic data, the FOMC downgraded its GDP (gross domestic product) forecasts for 2013 and 2014 with the central tendency being lowered to 2.0-2.3% from 2.3-2.6% for 2013, and to 2.9-3.1% from 3.0-3.5% for 2014.
On the other hand, unemployment rate forecasts were upgraded and inflation forecasts were revised upward to 1.1-1.2% from 0.8-1.2% in 2013, but downward to 1.3-1.8% from 1.4-2.0% in 2014.
“The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored,” FOMC said in a statement.
In key economic data, the FOMC downgraded its GDP (gross domestic product) forecasts for 2013 and 2014 with the central tendency being lowered to 2.0-2.3% from 2.3-2.6% for 2013, and to 2.9-3.1% from 3.0-3.5% for 2014.
On the other hand, unemployment rate forecasts were upgraded and inflation forecasts were revised upward to 1.1-1.2% from 0.8-1.2% in 2013, but downward to 1.3-1.8% from 1.4-2.0% in 2014.
“The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored,” FOMC said in a statement.
Click here for the FOMC press release
Click here for key economic projections