Fundamental Comment

Fed hails pick up in economic activity, inflation


As predicted, the Federal Reserve held its interest rates at 1.5 percent to 1.75 percent, where the Committee referred to progress in the economy and that inflation moved to the 2 percent target.

“On a 12-month basis, both overall inflation and inflation for items other than food and energy have moved close to 2 percent,” the FOMC statement noted.

The inflation on the 12-month basis is expected to run near the Committee's symmetric 2 percent objective over the medium term.

However, the Committee mentioned "market-based measures of inflation compensation remain low."

The statement also stressed on the improvement in economic activity and job gains, as well as the low unemployment rate.

“The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation,” according to the statement.

As of 18:30 GMT, the U.S. dollar traded lower at 92.15, ahead of Friday’s non-farmpayrolls figures.

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