By hitting a “soft” patch with the US economy, the US Federal Reserve showed itself to be in no rush to increase its interest rates, much to the relief of investors.
The US Central Bank’s rate-setting committee said a better labour market offset economic growth.
Meanwhile, the Central Bank committee said inflation still dominated most of the US’ economic growth. It also had concerns with the country’s slowed economic growth and the gloomy global economic forecast as well.
After the announcement, the dollar remained unchanged. However, investors are confident that there’s a 23 per cent probability that the Federal Reserve’s lending rate can rise in two months to June up from 21 per cent.
Investors expected an interest rate rise due to global concerns regarding the huge global equities sell-off due to the dropping stocks in China.
The Federal Reserve’s changed policy along with China’s slight recovery had helped ease investors’ concerns.
Meanwhile, US interest rates are very close to zero. Should the US economy become further undesirable, it may use “unconvential policy tools”.
Generally, analysts accept that the Federal Reserve is refraining from issuing forward guidance and is trying to ‘wait-and-see’ through the entire situation.