WASHINGTON (AP) – The Federal Reserve signaled Wednesday that it needs to see further improvement in the job market and higher inflation before it raises interest rates from record lows.
At the same time, the Fed at least opened the door to a rate increase later this year by no longer saying it will be “patient” in starting to raise its benchmark rate.
The statement the Fed issued after its latest policy meeting appeared to catch investors by surprise in suggesting that a rate increase might be further off than many had assumed. Stock prices surged and bond yields fell in the minutes after the news.
The Fed has kept its key short-term rate near zero since late 2008 to bolster the economy after a devastating financial crisis and recession. In its statement, the Fed noted that the economy, which it previously said was expanding solidly, has “moderated somewhat.”
Dan Greenhaus, chief strategist at BTIG, said the Fed’s statement Wednesday lowered the odds of mid-year rate hike.