Fed stands pat on interest rates

WASHINGTON – The Federal Reserve said Wednesday that it will leave its benchmark interest rate unchanged, as investors expected, while signaling gradual rate hikes ahead amid a strong economy.

The Federal Open Market Committee — the central bank’s rate-setting committee — said in its its latest policy statement that the U.S. job market is continuing to strengthen, noting that “economic activity has been rising at a strong rate.”

Ian Shepherdson, chief economist with Pantheon Macroeconomics, noted that the Fed statement upgraded the economy’s performance to “strong,” as opposed to merely “solid” in its June readout. Policymakers also did not comment on the possible impact of new U.S. and foreign tariffs amid rising conflict over trade, he said in a report. 

The Fed’s decision left the central bank’s key short-term rate at 1.75 percent to 2 percent, the level hit in June when the Fed boosted the rate for a second time this year.

The Fed projected in June four rate hikes this year, up from three in 2017. Private economists expect the next hike to occur at the September meeting.