US Federal Reserve leaves interest rates unchanged
US Federal Reserve chair Janet Yellen said interest rates would be maintained at 0.5-0.75 per cent as the labour market continues to strengthen and economic activity expands.
At the Federal Open Market Committee meeting (FOMC) today, Yellen said inflation increased in recent quarters but is still below the committee's two per cent long-run objective. She said the committee expects inflation to rise to two per cent over the medium term.
Yellen gave few clues as to when the interest rate might be hiked next, but analysts are pointing to another raise in March or June.
Lee Ferridge, head of multi-asset strategy for North America at State Street Global Markets said June is the most likely time for the next raise as the FOMC remains in "wait and see mode".
In its first meeting since President Donald Trump took office, the committee suggested it remains on track to tighten monetary policy this year. The FOMC said economic confidence was on the rise as the US nears full employment – the unemployment rate is currently around 4.7 per cent.
US stocks and 10-year Treasury yields were widely unchanged after Yellen's speech, however, the dollar index has been turbulent, rising to 99.962 before falling to 99.550.
Kully Samra, UK managing director of Charles Schwab, said: "We stand by our view that US stocks will outperform developed international stocks in the coming months. Although rising inflation and investor nerves could lead to bouts of volatility and some pullbacks, the bull market shows little sign of slowing in the near future."