US votes to keep interest rates on hold

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The US Federal Reserve has voted to keep federal fund rates in the 0.25 to 0.5 per cent target range.

“Inflation has continued to run below the Committee’s 2 per cent longer-run objective, partly reflecting earlier declines in energy prices and falling prices of non-energy imports,” the Federal Open Market Committee said in a statement.

Esther George was the only member to vote against the decision preferring to raise the federal funds rate to 0.5 to 0.75 per cent.

The committee noted that labour market conditions have improved even as growth in economic activity has slowed.

The committee said it expects inflation to rise to its target of 2 per cent in the medium term.

“The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run,” the committee statement said.

In December the US central bank moved rates up from the target rate of between 0 and 0.25 per cent, which they had been at since November 2008.