Federal Reserve officials announced Wednesday that they would hold interest rates rates steady, putting off further monetary tightening until at least June.
As widely expected, the central bank held its target at a quarter to a half-percentage point, where it has remained since December.
In its statement, the Fed included few clues as to when it might act next. But it did remove a reference to “risks” posed by “global economic and financial developments,” a possible indication that it is seeing more of the signs of growth needed to justify higher rates.
In an ambiguous summary of the past month, the statement said that “labor market conditions have improved further even as growth in economic activity appears to have slowed.”
The market reaction to the statement was muted, with stocks up slightly and bond futures markets implying slightly lower odds of a rate hike at the Fed’s June meeting, just under 20 percent.
In December, when the Fed raised rates for the first time since 2006, Fed officials thought that they might raise rates as many as four times in 2016.
Economic growth, however, has disappointed, and warnings signs of flagging growth overseas have led Fed Chairwoman Janet Yellen and other officials to suggest that low rates may be needed for longer.
Most recently, Fed members have forecasted that rates will rise twice in 2016. Before Wednesday’s announcement, however, investors were skeptical that even those increases would happen.
By keeping rates low, Fed members believe, the central bank can keep up spending and investment by increasing access to money and credit. Low short-term rates translate into lower interest rates across the board, including on business loans and consumer products, such as the interest rate on a conventional mortgage, which has drifted down to under 3.6 percent in recent weeks.
While the Fed has seen the unemployment rate, at 5 percent in March, drop to near the rate Fed members think goes along with a fully healthy economy, inflation has remained well below its 2 percent target, and consumer prices slipped on an annual basis in March. Some members of the Fed have expressed worries that they are not doing enough to ensure the inflation target is met.
Yellen also has argued that even lower rates previously planned are needed partly because of headwinds from abroad.
One member of the committee, Federal Reserve Bank of Kansas City President Esther George, dissenting from the decision, arguing that the Fed should raise rates now to up to three-quarters of a percentage point.
The Fed’s monetary policy committee will next meet to set monetary policy on June 14 and 15. That meeting will be accompanied by new economic projections from Fed members and a press conference by Yellen.
