No Hike: Fed Keeps Benchmark Rate Near Zero

Citing global economic weakness and financial market turmoil, the Federal Reserve agreed Thursday to keep its benchmark interest rate near zero despite the rapidly improving U.S. labor market.

But Fed policymakers’ forecast indicates they still expect to bump up the federal funds rate this year for the first time in nearly a decade, with meetings scheduled for October and December. Their projections, however, show they expect to raise it even more gradually over the long-term than they previously signaled . . .

The decision capped the most dramatic run-up to a Fed meeting in recent memory, with economists split on whether the central bank would raise its key rate, which has been near zero since the 2008 financial crisis and affects borrowing costs for consumers and businesses across the economy.

“An argument can be made for a rise in interest rates at this time,” Fed Chair Janet Yellen said at a news conference.But she added, “We want to take more time to evaluate the likely impact on the United States” from the overseas slowdown and market gyrations . . .

In a statement after a two-day meeting, the Fed said, “Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near-term.” (Read more from “No Hike: Fed Keeps Benchmark Rate Near Zero” HERE)

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