The Federal Reserve announced on Wednesday that interest rates would remain unchanged after they were raised for the first time since the financial crisis in December. The Fed indicated strength in the US job market and viewed the inflationary effects of low energy prices as temporary. All three major US market indices were negative following the announcement.
The Fed noted:
Given the economic outlook, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.
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In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.
See following visualizations which highlight a number of indices related to the Federal Reserve announcement.
Adjustments to the Federal Funds Rate (Last 12 months)
Federal Funds Rate vs. Inflation
Major U.S. Market Indices 1 Year Returns