The US Federal Reserve has announced its much-anticipated decision to maintain interest rates at the current level of around zero percent. Fed Chair Janet Yellen retreated on the impending rise due to concerns regarding the global economy and China’s slowdown.
“We’ve long expected to see some slowing in Chinese growth over time as they rebalance their economy. There are no surprises there. The question is whether or not there will be a risk of a more abrupt slowdown than most analysts expect,” Yellen said at a press conference, according to the BBC.
Following the announcement, Yellen spoke of the possibility of increasing the interest rate in October instead
Although the US unemployment rate fell to 5 percent in August, the lowest level since 2008, the Fed is keen to see a further improvement to the labour market before raising interest rates. In addition, the target inflation rate of around 2 percent has not been achieved either – which places more pressure on the Fed to hold off on the increase.
Further domestic concerns include falling stock prices and the appreciation of the dollar – factors which could lead to slowing economic growth in the country, despite its positive performance over the past year.
Following the announcement, Yellen spoke of the possibility of increasing the interest rate in October instead. Despite general consensus in the Fed that the rise will take place before the end of the 2015, Reuters reported that four policymakers believe it will not happen until next year or beyond.
Both the World Bank and the IMF have called for the Fed to continue holding off due to the impact that the increase may have on emerging markets, particularly given this year’s global economic slowdown.
