Federal Reserve leaves key policy rate unchanged

The US Personal Consumption Expenditures price index fell 0.2 percent in March in its first drop since February 2016 and its biggest decline since January 2015

The US Personal Consumption Expenditures price index fell 0.2 percent in March in its first drop since February 2016 and its biggest decline since January 2015

But the USA central bank said it expected growth to pick up again, and made a decision to keep a key interest rate on hold in a range of 0.75% to 1%. A second straight disappointing performance, combined with the anemic first-quarter economic growth, could lower the odds of a June rate hike.

BNZ estimated the chance of a June hike by the Fed has increased to 75 per cent from 63 per cent yesterday.

The Fed's policy-making committee kept its benchmark rate target at 0.75 percent to 1 percent. "One more move this year instead of two".

He said markets are now pricing a 70 percent chance of rate hike in June, which JP Morgan also expects.

The Federal Reserve voted Wednesday not to raise its key interest rate, as central bank officials expressed concern with the pace of economic growth.

That assumes, of course, that Trump can get all or most of his tax cuts and spending plans through Congress. They pointed to the fact that consumer spending, which accounts for apprx.

Clouding the economic outlook is tepid so-called "hard data" that, at times, contrast sharply with sentiment surveys.

Government data released last week showed that the US gross domestic product, a broad measure of economic activity, grew at just 0.7 percent on an annualized basis in the first quarter, the slowest pace in three years.

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"The USD and US rates were slightly higher after the statement, with nothing to change the consensus view that the Fed is likely to hike again next month, subject to the data flow over the next six weeks".

"The labor market has continued to strengthen even as growth in economic activity slowed", the statement said, with "solid" job gains and another decline in the unemployment rate, which now sits at 4.5 percent.

He said, the house is positive on the India market from a long-term perspective and expect an 18 percent earnings growth for the next fiscal. They will probably leave open the possibility for a June rate increase without cementing it.

The Federal fund interest rate peaked in the early 1980s at almost 20%.

If major world banks in the US, Europe and Japan don't properly coordinate and execute the unwinding of some $13 trillion in assets built up since 2008 - risk assets including stocks and mortgage-backed securities - that could set off a major downward market correction (or worse) in the stock and bond markets.

Central bankers have also been given some breathing room by the Trump administration, which has not yet followed through on its more aggressive plans to boost the economy.

If there's a change in that wording, expect the Dow Jones industrial average, S&P 500 index and Nasdaq composite to all lose ground, but bank stocks may buck the trend as Treasury yields rise. The Fed jolted investors when it released the minutes of its March meeting, which showed that most officials thought that process would be appropriate later this year.

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