The Federal Reserve decided Tuesday to leave interest rates unchanged, but indicated that inflation is still a risk, marking its third consecutive policy makers' meeting with no rate hikes.
It's possible that investors were waiting for some kind of positive indication from the FOMC. When the news was more austere than hoped, the markets drifted lower with Nasdaq leading the way down.
In a statement, the Fed said it still sees risks in the economy that could trigger an increase in inflation. "Recent data have indicated that the expansion of aggregate demand has moderated to a pace closer to the enhanced rate of growth of the economy's potential to produce," the FOMC said in a statement released after the meeting. "The more rapid advances in productivity also continue to help contain costs and hold down underlying price pressures." "However, the utilization of the pool of available workers remains at an unusually high level," "Moreover, the increase in energy prices, though having limited effect on core measures of prices to date, poses a risk of raising inflation expectations." The subdued behavior of those expectations so far has contributed importantly to maintaining an environment conducive to maximum sustainable growth," the Fed added. |
