Fed holds rates steady amid market turmoil

The Federal Reserve held interest rates steady on Wednesday amid growing concern about the global economy.

The central bank, which is led by Chairwoman Janet Yellen, announced at the close of its latest policy meeting that it was keeping interest rates between 0.25 and 0.5 percent. In addition, the Fed said it would be “closely monitoring global economic and financial developments.”

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The Fed decided to raise rates for the first time in nearly a decade at its December meeting. Since then, financial markets have been in upheaval, driven by a rapid decline in oil prices and growing concern about the strength of China’s economy.

In its newest statement, the Fed said that while the labor market had improved, economic growth had slowed.

Stocks reacted to the Fed’s latest statement with another sharp decline, as all three major US indexes turned negative in the first moments after the statement’s release.

Fed officials have long maintained that as it raises rates back to more normal levels, they would be doing so at a moderate rate while constantly weighing new data.

The market turmoil does not appear to have pushed the Fed off its existing plans, but the central bank is clearly keeping an open mind.

In addition to adding language about closely watching economic and financial developments, the Fed scrapped language from its last statement about the balanced risks facing the economy.

In its December statement, the Fed said that “the Committee sees the risks to the outlook for both economic activity and the labor market as balanced.”

That language disappeared in the January statement, and the Fed also scrapped earlier language about officials being “reasonably confident” that inflation would gradually rise.

Now, the Fed says it expects inflation to remain low in the near term, thanks to the decline in energy prices. However, it also added that its longer-term inflation expectations have not changed.