The U.S. Federal Reserve kept its benchmark rate unchanged on Thursday, dashing hopes among some economists that America's central bank would hike lending rates for the first time in nine years.
The American central bank kept its funds rate in a range between zero and 0.25%, the same level it's been at since December 2008.
"The committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labour market and is reasonably confident that inflation will move back to its two per cent objective over the medium term," the Fed's open market committee said in a statement.
The main reason for the decision to hold off hiking is continuing gloom about the global economy which is looking even more uncertain than usual at the moment. Signs of a sharp slowdown in China have intensified fear among investors about the U.S. and global economy. And low oil prices and a high-priced dollar have kept inflation undesirably low.
Central bankers at the Fed meet every six weeks to decide on America's monetary policy. After standing on the sidelines since slashing rates to the bone in the last recession, there was much speculation that the central bank might move to raise interest rates for the first time in nine years.
Economists polled by Bloomberg had said there was about a 30% chance of a rate hike Thursday.
The last time the Fed hiked interest rates was in June 2006. After cutting it down from there, it hasn't moved its benchmark rate since December 2008.
Although it falls short of a formal inflation target the way the Bank of Canada does, the Fed says it makes policy decisions in part with a view to keep inflation around 2%. The latest core inflation data shows the rate at 1.2%, which gave the Fed enough of an excuse to stand pat again. The Fed now thinks inflation will average 1.7% in 2016, still below its unofficial sweet spot.
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