The Federal Reserve left short-term interest rates unchanged after weeks of market-churning debate, putting off an historic move to end an era of ultra-cheap credit amid worries about weak growth overseas. While Central Bank officials don’t believe recent global economic and market turbulence will throw the U.S. economy off track, they want to be sure before they push rates higher.
“In light of the developments that we have seen and the impacts on financial markets, we want to take a little bit more time to evaluate the likely impacts on the United States,” Fed Chairwoman Janet Yellen said Thursday at a press conference following a two-day policy meeting.
The decision left uncertain for a while longer just when the Fed would raise its benchmark rate, which has been near zero since December 2008. Most of the policy makers at the meeting, 13 of 17, indicated they still expect to move this year, but that was down from the 15 who held that view in June. The Central Bank has two more scheduled policy meetings this year, in late October and mid-December.
“The 10-year swap rate, a CMBS conduit loan index that affects interest rates, reacted positively on the news,” commented Michael D. Sneden, Executive Vice President at ValueXpress. “The rate fell from 2.30% to 2.17% on the news and declined further to 2.12% on Friday, September 15, which is significant, reducing rates on prospective loans by 18 basis points.”
