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Federal Reserve leaves benchmark interest rate steady again

The Federal Reserve elected to keep its benchmark interest rate where it is on Wednesday, saying an improving U.S. economy is not quite healthy enough to remove stimulus at this time.
Federal Reserve chair Janet Yellen was one of nine board members who voted to keep the benchmark interest rate steady on Wednesday. (Evan Vucci/Associated Press)

The Federal Reserve elected to keep its benchmark interest rate where it is on Wednesday, saying an improving U.S. economy is not quite healthy enough to remove stimulus at this time.

The U.S. central bank announced Wednesday it has decided to keep its federal funds rate in a range between 0.25 and 0.5 per cent, saying in a release that while "near-term risks to the economic outlook have diminished" and the job market is "improving" things still aren't good enough, in the bank's view, to remove stimulus.

That's the same level it has been since the bank shocked investors with a small hike last December. Economists who cover the Fed say they expect another small hike some time between now and the end of the year.

Paul Ashworth at Capital Economics said that while the Fed stood pat, the overall tone of the statement "is a clear indication that a September rate hike might be coming."

"The new statement is quite a turnaround given that since the last meeting in June, the U.K. actually voted to leave the European Union," Ashworth said.

The Fed's decision was not unanimous, however, as only nine of the Fed's 10 board members voted to stand pat. One voted to raise the rate but was outnumbered.

The lone wolf, Esther George, had pushed for rate hikes earlier this year too, before voting to stand pat at the previous two Fed meetings

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