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US Fed leaves rates unchanged, stays on course for December hike
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IANS | 09 Nov, 2018
The US Federal Reserve on Thursday left key interest rates unchanged, in
line with market expectations, keeping the central bank on track to
have one more rate hike in December. The Fed decided to
maintain the target range for the federal funds rate at 2 to 2.25 per
cent, the central bank said in a statement after concluding a two-day
policy meeting, Xinhua news agency reported. The Fed said the
US labor market has continued to strengthen and the economic activity
"has been rising at a strong rate" since its last policy meeting in
September, when it raised rates for the third time of the year. While
household spending has continued to grow strongly, growth of business
fixed investment "has moderated" from its rapid pace earlier in the
year, the Fed noted, adding both overall inflation and so-called core
inflation for items other than food and energy "remain near" the central
bank's target of 2 per cent. The Fed's meeting came after the
Labor Department reported last week that the US economy added a
larger-than-expected 250,000 jobs in October, with the unemployment rate
unchanged at 3.7 per cent, the lowest level in almost five decades.
"Rapid economic growth continues to fuel a labor market that delivers
the enviable combination of job growth, labor force growth, and now
faster wage growth," Tim Duy, a professor of economics at the University
of Oregon, wrote in a blog post last week. "I think you can
make an argument that we are at or beyond full employment with enough
pressure on the economy that we see both faster wage growth and faster
inflation," Duy said, believing that the central bank is on track to
raise rates once more in December. In its most recent
forecast in September, the Fed envisioned one more rate hike in 2018 and
three more in 2019. The central bank will hold its next policy meeting
on December 18-19. Jan Hatzius, Goldman Sachs's chief
economist, said in a recent note that US inflation "is on track for a
meaningful overshoot" of the Fed's 2 per cent target and the US economy
really needs to slow to "avoid a dangerous overheating." Some
Fed officials also believed that US interest rates might have to rise
high enough to prevent economic overheating, according to the minutes of
the Fed's September policy meeting released last month. "A
few participants expected that policy would need to become modestly
restrictive for a time and a number judged that it would be necessary to
temporarily raise the federal funds rate above their assessments of its
longer-run level," said the minutes. While US President
Donald Trump recently criticized Fed policymakers for raising rates, Fed
Chairman Jerome Powell has promised that the central bank would remain
politically independent. "We consider the best thinking, the
best theory, and the best evidence... we don't consider political
factors or things like that," Powell told reporters at a press
conference in September.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
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64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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