In a decision that was widely expected by the financial world, the Federal Reserve has announced it will not introduce any interest rate hike in the near future and is “keeping a close eye” on the global financial climate.
The dollar has been strengthening over the past few months and the Fed remarked that this had a negative effect on the country’s economic expansion, slowing it due to declining exports.
A hike did occur last month, which raised the key rate to around 0.3 percent. It was the first interest rate increase in nearly ten years.
In a press release on Tuesday after a three day meeting, a spokesman for the central bank said that they are “looking carefully at a number of different developments” in the economy and their implications for various industries.
In their announcement, they gave no clear signs of when a further hike would occur, but said they expect inflation to continue increasing and the US labour market to remain solid.
An unexpectedly mild winter caused a decline in retail sales and household spending resulting in a downturn in the US economy in November and December last year.
Compounding the problems in the world’s number one economy has been the relentless decline in crude prices, hitting decade long basement levels at below $30 per barrel, mainly due to the slowing expansion in China, which knocked global stocks badly.
CITIC Tokyo International, an investment firm which deals mostly in the Chinese market, said that trading may be halted again in the coming days because of concerns over the decline.
