Federal Reserve modifies stance on low interest rates

Federal Reserve modifies stance on low interest rates

The US Federal Reserve has modified its stance on interest rates, which have been kept at a record low of 0% since the financial crisis in 2008.

It removed the word “patience” from its regular statement. The language was seen as an indication that the central bank would refrain from raising rates for at least a few months.

But the Fed said it would wait until it saw “further improvement” in the US labour market before raising rates.

US shares rose sharply on the news.

A delayed rate rise is good news for US companies, who will remain able to borrow cheaply for some time yet.

That cheered investors, who pushed the Dow Jones higher by 0.9% or 159 points to 18,008, while the broader S&P 500 rose 1% to 2,096.

Many market watchers had expected the Fed to signal on Wednesday that it would move towards a rate rise in June or September.

Not impatient

However, in a statement released at the end of its two-day policy meeting in Washington, DC, the Federal Reserve warned that US economic growth had “moderated somewhat” since January.

Fed officials added that it would “appropriate” to raise interest rates once there had been “further improvement in the labor market” and cautioned that “this change in the forward guidance does not indicate that the Committee has decided on the timing of the initial increase”.

Read more: http://www.bbc.com/news/business-31953699

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