Economy US Fed: No interest rate hike, harsh winter slowed growth

US Fed: No interest rate hike, harsh winter slowed growth

The US Federal Reserve Building in Washington
The US Federal Reserve Building in Washington

 (AA) – The Federal Reserve held interest rates on Wednesday, as weak economic performance data made the Fed think that growth would remain slow for some time, according to a statement.

The Fed said economic growth “slowed during the winter months, in part reflecting transitory factors.” A harsh winter, along with the ports strike on the West coast, slowed recovery.

The Fed said it expects the economy to rebound and grow at a moderate pace in the coming months.

But there was little indication of when the Fed might raise interest rates. June is probably too early, but September is possible, analysts said.

Consumer spending declined, business investment has softened, and exports are down, the statement said.

The Commerce Department said Wednesday morning that the economy grew just 0.2 percent from the previous year in the first quarter, well below the modest 1 percent pace which analysts had forecast.

Meanwhile, inflation remains well below the Fed’s less-than-2 percent target, with core inflation, which excludes food and energy costs, rising only 0.9 percent in the last quarter. 

Unemployment has also remained at 5.5 percent in March and the number of unemployed persons was little changed at 8.6 million. Over the year, the unemployment rate and the number of unemployed persons were down by 1.1 percentage points and 1.8 million.

The Fed has linked its decision on an interest rate hike to improved economic data.

For now, that data is weak. 

Lower oil prices have reduced inflation while cutting down on energy-related investment and a stronger dollar has curbed exports and made imports cheaper.

Previous articleTurkish Aerospace Industries bags new Airbus contract
Next articleSADC leaders approve industrialization strategy