The Federal Reserve kept its benchmark interest rate unchanged today but noted that inflation is nearing its 2 per cent target rate after years of remaining undesirably low.
The Fed ended its latest policy meeting by leaving its key short-term rate unchanged at 1.5 per cent to 1.75 per cent, the level it set in March after its sixth rate increase since December 2015. The Fed is gradually tightening credit to control inflation against the backdrop of a tight job market, a resilient economy and a pickup in consumer prices.
In a statement, the central bank said it expects "further gradual increases" in rates and says recent data show it's edging close to achieving its annual 2 per cent target for annual inflation.
"Inflation on a 12-month basis is expected to run near the committee's symmetric 2 per cent objective over the medium term," the Fed said.
The use of "symmetric" suggests that Fed officials might be willing to let inflation run slightly above its 2 per cent target for some time, given that inflation has run below the target for six years.
Analysts said the Fed's statement today made it even clearer that it intends to resume raising rates at its next meeting in mid-June. And some Fed watchers said they interpreted the statement to suggest that the central bank foresees four hikes for 2018, up from the three it predicted in March.
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