US Fed leaves interest rates untouched, the S&P, Dow edge down

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The US Federal Reserve (Fed) left key interest rates unchanged and highlighted the strength of the US economy and labor markets on Wednesday.

The Fed decided to maintain the target range for the federal funds rate at 1.75 to 2%, according to the statement issued after the policy meeting.

It reiterated that the economic activity “has been rising at a strong rate”, the US labor market “has continued to strengthen” since the last meeting in June.

“On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2%,” the Fed said, showing its confidence that US inflation will move toward its target of 2%.

The Fed also signaled that it remained on course for an expected interest rate hike in September, even as it held its fire for now.

"Given the Fed's evaluation of current and future growth, rate hikes are likely in September, December and possibly as many as four more next year, unless the economy decelerates sharply," economist Joel Naroff said in a note.

The stock market presented a negative feedback towards the announcement, the S&P 500 lost 2.93 points, or 0.10%, to 2,813.36, and Dow dropped 81.37 points, or 0.32% to 25,333.82.

Technology companies pushed the Nasdaq higher, adding 35.50 points, or 0.46%, to 7,707.29.

Traders work at the closing bell at the New York Stock Exchange on Wall Street. / VCG Photo

The key 10-year US Treasury note hit the 3% mark after the decision.

“The Fed demonstrated that they are willing to let the economy run a little hot as long as they don’t foresee a significant spike in inflation which would potentially serve as a headwind for the current bull market run,” said Bob Baur, chief global economist at Principal Global Investors.

The gradual rate increases are unlikely to please President Donald Trump, who publicly chastised the central bank last month, saying policy was undercutting his efforts to juice the economy.

Source(s): AFP ,Reuters ,Xinhua News Agency