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The Fed released its interest rate decision on Thursday. The Fed kept its interest rate unchanged at 0.00%-0.25%. This decision was not unexpected.
The Fed took into account the slowdown in the global economy and low inflation expectations. That was the main reason to keep the monetary policy unchanged.
"Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term," the Fed said.
The accompanying statement and comments by the Fed Chairwoman Janet Yellen were more dovish than expected. The Fed did not announce any new guidelines on the terms of the first interest rate hike.
"When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent," the Fed said.
The Fed pointed out that the pace of the interest rate hike will be slower than expected earlier once that the Fed starts raising its interest rates. GDP for 2016 and 2017 were downgraded.
The number of members awaiting the interest rates this year declined. 13 of 17 FOMC members are awaiting that the Fed starts raising its interest rates this year, down from 15 earlier.
FOMC members voted 9-1 to keep interest rates unchanged. Only Richmond Fed President Jeffrey Lacker voted to raise interest rate by 0.25%.
Yellen noted that the developments abroad had impact on the Fed's decision.
"The outlook abroad appears to have become less certain," she said, adding that the Fed "judged it appropriate to wait".
The Fed chairwoman pointed out that the interest rate hike in October is possible.
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