Fed leaves interest rates on hold for second straight meeting

(Sharecast News) - The Federal Reserve has held interest rates steady on Wednesday for the second straight meeting, with chair Jerome Powell saying that policymakers would be patient before making any further moves. The Federal Open Market Committee concluded its two-day meeting in Washington by leaving the federal funds rate at a range between 5.25% and 5.5%.

"Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks," the FOMC said in a statement following its decision.

In a press conference, Powell said the FOMC would continue to "proceed carefully" and assess economic data as it comes through.

However, he indicated that they would wait for rate hikes and tighter financial conditions - given the recent run-up in bond yields to a 16-year high - to feed through to the economy.

"Given our expectations for a moderation in macro variables over Q4, we continue to expect the Committee to keep the Fed funds rate unchanged at current levels despite its slightly hawkish policy bias," said analysts at TD Securities.

"That said, given recent robust economic activity and persistent labour market strength, we can't fully rule out the possibility of tighter rates in the near future."