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US keeps its interest rates at a record low

By Damian Clarkson

Published 18/09/2015

US Federal Reserve's Janet Yellen
US Federal Reserve's Janet Yellen

The Federal Reserve last night voted to keep US interest rates at their record low level yet again.

It means rates have remained at a target range of between zero and 0.25% since December 2008.

Many had felt last night's decision too close to call. While the economy is growing and unemployment is at a seven-year low, recent turmoil in global stock markets triggered by a slowdown in China will surely have played a part in staying the Fed's hand.

It suggests the world's biggest economy is not quite ready to wean itself off the financial life support.

US stocks rallied in the minutes after the announcement was made. Federal Reserve chairwoman Janet Yellen was among those who voted for the rate to stay put.

Christine Lagarde, managing director of the International Monetary Fund, will no doubt have welcomed the news. She had called on the Fed to hold fire until early 2016, saying the economy would be better off as a result.

Responding to the decision to hold rates, Lee McDarby, managing director of corporate foreign exchange and international payments at moneycorp, said: "It became clear that the markets believed the likelihood of a US interest rate hike had decreased, and on that basis the dollar gradually weakened.

"That said, markets still remained fairly range-bound. As the Fed has held firm on rates, we anticipate that sterling may come under renewed focus and the market may turn its attention towards the Bank of England and the possibility of a UK rate hike."

Stephanie Sutton at Fidelity Worldwide Investment said: "The Fed has decided to hold back from raising rates at this point.

"However, normalisation appears increasingly imminent, with a first rate rise now likely in December. It is probably warranted, with the US economy expanding and unemployment levels now in close proximity to the theoretical 'natural rate'."

Belfast Telegraph

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