The Federal Reserve Bank on Wednesday said that it would adopt a “patient” approach on taking its final decision on raising the interest rates, where they have been stuck since late-2008.
After largely looking through the weak spots in the economies overseas, the US Central Bank said that the American economy is expanding “at a solid pace”, giving enough room for increasing the benchmark borrowing costs from zero later this year.
Concluding a two-day policy meeting, policymakers struck an upbeat tone on the prospects of American economy and held to their outlook that the weakness led by the energy sector in inflation would disperse.
“Economic activity has been expanding at a solid pace. Labor market conditions have improved further, with strong job gains and a lower unemployment rate. Recent drops in energy prices have boosted household purchasing power,” according to the policy statement by the Federal Reserve on Wednesday.
While making its announcement, the Fed largely skirted over falling economies in Asia and Europe, saying that it will be taking ‘financial and international developments’ into consideration when deciding over the timing of key rate hikes.
In their December statement, the Federal Reserve had only taken account of “financial developments.”
The stance of American central bank stands in contrast with many of its peers in rich nations, which have eased their monetary policy in recent times in order to boost their struggling economies.
The divergence in the monetary policy has helped push the greenback to multi-year highs.
John Silva, an economist at Wells Fargo in Charlotte, said, “You would have thought that if you were going to really postpone a rate surge to 2016 there would have been some more emphasis on international events and the dollar.”
Soon after the statement was released, the S&P 500 stock index turned negative. On the other hand, the yield on the US Treasury bond of 30-year came back to a record low. The US dollar turned stronger against a broad index of foreign currencies.