Interest Rates Unchanged

As expected, the Fed left the federal funds rate at 1%. Underpinning this is the belief that demand growth will lag behind productivity growth. From Reuters:

RICHARD FRANULOVICH, SENIOR CURRENCY STRATEGIST, WESTPAC BANKING CORP, NEW YORK:

“Looks like the Fed is no longer offering an optimistic outlook on the labor market. Recall that in the last statement the Fed said other indicators are leading to an improvement in the labor market. The Fed has dropped that completely and now all they’re saying is that the labor market is lagging. So the Fed is less bullish on the labor market. So this statement is mainly dollar-negative.”

AB