- Janet Yellen, Fed Chairwoman
The Fed maintained interest rates unchanged at its crucial September meeting in light of worries about the global economy, financial markets turbulence and tepid domestic inflation. Yet, the US central bank left the door open for a modest policy tightening later this year. Even though the Fed's post-meeting statement said Jeffrey Lacker, the hawkish President of the Federal Reserve Bank of Richmond, insisted on increasing the Fed's target range on overnight rates, the overall tone of the statement was dovish. Fed Chair Janet Yellen said that the main drag on the US economy came from a precipitous decrease in oil prices over the past year, which restrained business investment due to considerable contraction in oil drilling activity. Moreover, Yellen highlighted that a recent decline in US stock prices and an increase in the value of the Dollar already were tightening conditions in financial markets, which could hamper US economic growth regardless of how the Fed acts.
The Fed expects the economy to grow 2.1% this year, slightly faster than previously estimated. However, its forecasts for GDP growth in 2016 and 2017 were revised downwards. The US central bank also forecast inflation would climb only slowly toward its 2% target even as unemployment falls lower than previously expected. It sees the jobless rate hitting 4.8% next year and remaining at that level for as long as three years.
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