US Federal Reserve postpones interest rate rise

The US Federal Reserve signalled it remained on course to lift interest rates this year, but left its options open on when to pull the trigger as it awaits further evidence on the strength of the economic recovery.

In a statement after its latest policy meeting, the US central bank on Wednesday gave a stronger endorsement of progress in the job market, saying it was seeing “solid” job gains and that slack in the jobs market had diminished since early this year.

However, it stuck with existing language, saying activity was expanding “moderately” and risks to economic outlook were “nearly balanced” – the latter being an acknowledgment of continued uncertainties about the recovery.

The recent decline in oil prices prompted the Fed to drop a previous reference to stabilising energy prices, highlighting the continued uncertainty about inflation.

Janet Yellen, the Fed chair, has been priming the markets for a rise this year, with speculation centring on a move in either the September or December meetings, at which she holds a scheduled press conference and Fed policymakers release economic forecasts.

Markets have sought clear hints as to whether the Fed will move as soon as its next meeting in September, but the central bank did not give an explicit indication on timings.

With two jobs reports to come before that meeting, as well as key evidence on wages and prices, policymakers want to watch the numbers before committing themselves.

As expected, on Wednesday the Fed left its target range for short-term rates at the near-zero level they have occupied since late 2008.

– (Copyright The Financial Times Limited 2015)