From The Washington Post:
The Federal Reserve kept its influential interest rate unchanged Wednesday but upgraded its assessment of the U.S. economy and said the risks to the recovery have “diminished.”
In an official statement, the central bank said it is still monitoring the global economy after repeated bouts of volatility threatened to derail growth at home. But for now, the Fed characterized the economic expansion as ”moderate” and pointed to strength in consumer spending. The job market has rebounded from a sharp slowdown in hiring in May, though the Fed noted that business investment was soft and inflation remained below its target.
The improved tenor of the central bank’s statement suggests officials are gaining confidence that the nation’s economy has pulled through recent turmoil relatively unscathed. Britain’s surprise decision to abandon the European Union had roiled international financial markets and upended the country’s political leadership. Policymakers around the world are closely watching the fallout, though the extent of any damage will not be clear for years.
At the Fed, concern over the referendum in Britain was a key reason officials voted not to raise rates at their meeting in June. Analysts had widely expected the central bank to remain on hold Wednesday as well to give officials time to analyze the repercussions. The Fed’s policy-setting committee approved the decision 9-1, with Kansas City Fed President Esther George the sole dissenter, favoring a rate increase. But the central bank’s acknowledgement that global risks are fading suggest it could be inching in that direction as well.
The Fed raised its benchmark overnight lending rate in December for the first time since slashing it to zero during the depths of the 2008 financial crisis. The increase was just one quarter of one percent, but it was a critical step toward …