The U.S. Federal Reserve kept intereste rates unchanged and signaled that it will start reducing its $4.2 billion balance sheet in October. Roselle Chen reports.
The U.S. Federal Reserve left interest rates unchanged, but signaled a rate hike might be coming by the end of the year. Fed Chair, Janet Yellen: (SOUNDBITE) (English) FEDERAL RESERVE SYSTEM, CHAIR OF THE BOARD OF GOVERNORS, JANET L. YELLEN , SAYING: "At our meeting, that concluded earlier today, my colleagues and I on the Federal Open Market Committee, decided to maintain the target range for the federal funds rate at 1 to 1.25 percent. This accommodative policy should support some further strengthening in the job market and a return to two percent inflation, consistent with our statutory objectives." Yellen also said, the Fed will start reducing its $4 billion portfolio in October. Wall Street went into the red after Fed's decision. Lazard Asset Managment's Ron Temple: (SOUNDBITE) RONALD TEMPLE, MANAGING DIRECTOR AND HEAD OF U.S. EQUITIES, LAZARD ASSET MANAGEMENT (ENGLISH) SAYING: "I think the Fed is, a, looking at inflation and saying 'okay, is our dual mandate is maximum employment, price stability, we don't have inflation at the two percent target we've set, so there is no rush.' And, b, they're looking and saying, 'okay, we actually have some decnet economic momentum, let's let it get some runway, and see if we can pull some of those workers who left the labor market during the crisis back into the labor market." The Fed kept its outlook for three hikes in 2018. But forecasts only two increases in 2019 and one in 2020.