US Fed leaves interest rates unchanged after poor GDP figures

GDP figures showed a sharp drop in economic growth to 0.2 per cent in the first quarter

Andrew Dewson
Thursday 30 April 2015 12:45
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The poor GDP figures were a result of several factors, including a particularly harsh second half to the winter
The poor GDP figures were a result of several factors, including a particularly harsh second half to the winter

The Federal Reserve has acknowledged that there are soft patches across the US economy, prompting traders to push back expectations of an interest rate rise as the US central bank’s rate-setting committee concluded its latest two-day meeting.

The Fed left the cost of borrowing money in the US unchanged at 0 - 0.25 per cent, just hours after disappointing GDP figures showed a sharp drop in economic growth to 0.2 per cent in the first quarter. This was well below consensus forecasts of annualised 1 per cent growth.

The central bank’s statement did note that growth “had slowed during the winter months”, but attributed this in part to “transitory factors”, suggesting it expects a bounce back in the second quarter.

The Fed also reiterated its desire to see an improvement in the labour market and inflation closer to its 2 per cent target before acting on rates.

Tracie McMillion, at Wells Fargo Private Bank, said: “They have pretty much taken June out of the running… That puts September potentially still in the running and possibly December [for a rates increase].”

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