Fed leaves rate unchanged, expecting to meet inflation target

The overnight funds rate will remain in the 1.25% - 1.5% range, according to an announcement by the Federal Reserve yesterday after Janet Yellen’s final meeting as Fed chair.

While the Fed raised the rate three times last year, the most recent numbers show inflation is still below the Fed’s 2% target despite the country’s lowest unemployment rate since Dec 2000 at 4.1%.

“Inflation on a 12-month basis is expected to move up this year and to stabilize around the Committee's 2 percent objective over the medium term," the policy-making Federal Open Market Committee said in a statement.

"Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely,” the statement says

The observation on inflation differed from a statement published December, which said that core and headline measurements "have declined" and were "running below 2%”."

While the no-hike decision was widely expected, officials expect three hikes this year and the Fed might have another increase likely at the final meeting this year, according to various reports.

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