Federal Reserve policy makers did not raise rates as some had expected, in a nod to concerns about a weak global economy. Bobbi Rebell reports.
The U.S. Federal Reserve kept interest rates unchanged, pointing to concerns about a weak global economy. Fed Chair Janet Yellen was asked about the recent stock market turmoil: SOUNDBITE: JANET YELLEN, CHAIR, U.S. FEDERAL RESERVE (ENGLISH) SAYING: "We don't want to respond to market turbulence. The Fed should not be responding to the ups and downs of the market, and it is certainly not our policy to do so, but when there are significant financial developments, it is incumbent on us to ask ourselves what is causing them and, of course, while we can't know for sure, it seemed to us that concerns about the global economic outlook were drivers of those financial developments." The central bank is still leaning toward a rate hike sometime this year. But it lowered its long-term economic growth forecast. The jobs picture has improved at a faster pace then expected. Policy makers now expect the unemployment rate to dip to 4.8 percent next year and stay at that level for as long as three years. But they are still paying close attention to inflation, which they now expect to creep just slowly towards their 2 percent target. John Silvia, Chief Economist at Wells Fargo had expected a hike: SOUNDBITE: JOHN SILVIA, CHIEF ECONOMIST, WELLS FARGO (ENGLISH) SAYING: "I don't agree with their decision. I think, it is very difficult. How do we measure what they are talking about with respect to global developments? To us, there is always uncertainly on global developments. You are talking about many, many different nations, different stage of the economic cycle, different policy. So, I would disagree. I would have gone ahead and done 25 basis points. " Yellen says, if the Fed raises rates at its next meeting in October, they will call a press briefing- even though one is not currently scheduled.