Fed Holds Steady, No Hint Of September Rate Hike

(RTTNews) - Despite a modest improvement in the economic outlook, the Federal Reserve on Wednesday offered no explicit guidance indicating that it will soon raise interest rates from zero.

As expected, the Fed kept its benchmark interest rate unchanged near zero, where it has been since 2008.

Many market watchers thought the Fed would lay further groundwork for a rate hike as soon as September, but policy makers remain reluctant to tighten, even though economic activity seems to be picking up after a second consecutive rough winter.

Inflation, meanwhile, continues holding far below the Federal Open Market Committee's 2 percent annual inflation target.

Only 2 of 17 Fed officials want to wait until 2016 to hike, but the decision to hold off for now was unanimous.

The Fed cut its forecast for GDP this year to 1.8% to 2%, down from 2.3% to 2.7%, reflecting the brutal winter weather. The economy has "expanded moderately" since the winter contraction, policy makers said.

"The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term," the statement said.

Fed Chair Janet Yellen will field questions from reporters in Washington, DC at 2:30 pm ET.