The Federal Reserve will suspend its benchmark interest rate for the first time since the financial crisis.
“The Committee is confident that inflation expectations will remain accommodative, that the pace of monetary and fiscal tightening is reasonable and that the economy is resilient to shocks,” the statement from the central bank said.
In its statement, the central banks’ policy-setting arm also said the rate could be increased in the future if it deemed that it was “necessary to address persistent risks to the labor market, financial system and financial system stability”.
The US Federal Reserve is expected to continue its unconventional monetary policy strategy in the coming months, with a rate hike expected next month.
The Federal Reserve said that its target rate for now is 1.25 percent.
While the central bankers are keen to see a strong global economy, it will not be able to control inflation if it keeps on using unconventional monetary policies, said Anthony Reuben, an economist at Credit Suisse.
What we’re reading on the ABC:Inflation forecastUpdated at 12:05amA number of indicators suggest the US economy has been growing faster than expected this year. “
[It will be] not only a short-term concern, but a longer-term one, as a greater degree of excess capacity in the economy means that it will have to be more accommodative in the long run.”
What we’re reading on the ABC:Inflation forecastUpdated at 12:05amA number of indicators suggest the US economy has been growing faster than expected this year.
However, it has still been a slow start to the year and there is still a lot of room for growth in the US, which is currently forecast to grow by 0.6 per cent this year and 0.9 per cent next year.
Read more about economic and financial crisis: