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Fed Decides Against Raising Interest Rates
Friday, September 18, 2015 6:40 AM

As many expected, the Federal Reserve's monetary policy setting body, the Federal Open Market Committee (FOMC), left short-term interest rates unchanged after weeks of market-churning debate about whether it was time to end an era of near-zero rates.

In the board's statement after yesterday's policy-setting meeting, the Fed said inflation has not yet climbed from recent low levels. However, inflation is expected to rise gradually toward 2 percent over the medium term as the labor market continues to strengthen and the "transitory effects of declines in energy and import prices" fade.

"The Fed continues to do a balancing act," said Credit Union National Association Senior Economist Perc Pineda. "The U.S. economy is not in a recession, and definitely not overheating. The former calls for lower interest rates and the latter calls for higher interest rates. Currently, the chances of a recession or overheating are both slim. Hence, doing nothing is the most logical thing to do."

While the Fed said that both the labor and housing markets continue to improve, turbulent economic conditions abroad have given the committee cause for concern.

A large majority of Fed officials still believe the central bank will raise rates before year-end. In June, 15 of 17 officials said they expected to raise rates this year, according to official projections released with the Fed's policy statement; however, Thursday, the number of people who expected to raise rates this year slipped to 13.

All eyes now turn to the Fed's next two-day meeting Oct. 27-28.