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US Federal Reserve holds interest rates US Federal Reserve holds interest rates
(35 minutes later)
The Federal Reserve has decided not raise interest rates in a move much anticipated by the market. The US Federal Reserve has decided to keep interest rates at between 0.25% and 0.5%.
The central bank said the labour market was strengthening, but it was still looking for inflation to reach its 2%. target. The central bank said the labour market was strengthening, but it was still looking for inflation to reach its 2% target and expected the US economy to continue to "expand at a moderate pace"
The Fed indicated it expected the US economy to continue to "expand at a moderate pace" The US central bank last raised rates in December, saying it expected to raise rates four times in 2016.
Interest rates remain between 0.25% and 0.5% after being raised for the first time in nearly a decade in December. It now says it expects to raise rates just twice this year.
Investors will now look to the Fed's June meeting for the next potential rate rise. "Proceeding cautiously will allow us to verify that the labour market is continue to strength given the economic risk from abroad," said the Chairman of the Federal Reserve, Janet Yellen, speaking at a press conference after the announcement.
In a statement issued on Wednesday, the Fed's Open Market Committee - which decides the level of interest rates - said that while the US economy was seeing some improvement, weaker global markets were having a dampening effect.
"Household spending has been increasing at a moderate rate, and the housing sector has improved further; however, business fixed investment and net exports have been soft," the committee said.
An unexpected rise in underlying US inflation has led many investors to view June as month when the Fed will raise rates.
The Fed said its target of 2% inflation could be reached over the medium term, however, due to the effect of falling oil prices.
Ms Yellen stressed that "policy is not on a pre-set course" and would change "as shocks positive or negative effected [economic] forecasts".