State of the Economy
Fed holds off on raising interest rates, citing job market slowdown
The Federal Reserve announced Wednesday that it has once again decided to hold off on hiking interest rates because of lingering uncertainty about the job market and slower than expected economic growth. The latest jobs report found the economy added a mere 38,000 jobs in May, far lower than economists expected. "The pace of improvement in the labor market has slowed while growth in economic activity appears to have picked up," the Fed said in its statement, noting increased spending on housing and consumer goods.
The Fed initially anticipated being able to gradually increase interest rates multiple times between this year and next, but it now remains uncertain when it might raise rates again. However, the Fed did signal that it still plans to implement two rate increases this year, though Fed Chairwoman Janet Yellen has maintained that such increases will not happen until the Fed has greater confidence in the economy's health. The possibility of Britain's exit from the European Union has also heightened uncertainty in global markets.
The Fed last hiked rates in December from "record lows" to between 0.25 percent to 0.50 percent, The Associated Press reports. The decision to keep rates unchanged Wednesday was unanimous and widely expected among economists.