Investing.com - The Federal Reserve kept interest rates unchanged on Wednesday and said it expected labor market conditions to strengthen.
As was widely expected, the policymaking Federal Open Market Committee (FOMC) agreed to leave its benchmark rate target at 1%-1.25%.
Inflation expectations were little changed as the Fed struck a familiar tone, pointing out that inflation on a 12-month basis is excepted to remain “somewhat below 2%” in the near term but stabilize around the Fed’s 2% inflation target over the medium term.
"...overall inflation in September; however, inflation for items other than food and energy remained soft," the FOMC said in a statement Wednesday.
Inflation has lagged the Fed’s target for several months as data earlier this week revealed that the Federal Reserve's preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, rose just 1.3% in the 12 months through September.
On the economic front, the Federal Reserve downplayed the impact of disruptions from Hurricanes Irma and Harvey, pointing to an uptick in both labor market strength and economic activity.
"Information received,...,indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate despite hurricane-related disruptions, " according to the FOMC statement.
The statement drew a subdued reaction in markets as the unchanged rate decision was widely expected while investors appeared to be more concerned with President Trump’s pick for the next head of the Federal Reserve amid growing speculation that the president is leaning toward Governor Jerome Powell.
Trump is expected to announce his choice on Thursday, prior to his five-nation trip to the Asia Pacific region as the U.S. seeks to curb North Korea’s growing nuclear threat.
The dollar rose 0.10% to trade at 94.55 while the U.S. 10-Year fell 0.39% to 2.354.
Gold Futures rose to $1,278.68.