Fed holds interest rates steady, signals another hike coming soon

New York ( CBS Market Watch): The Federal Reserve kept policy steady on Wednesday while signaling it views another rate hike is likely as soon as September.

At a two-day meeting that ended Wednesday, the Fed voted unanimously to keep its benchmark federal-funds rate in a range of 1.75% and 2%.

In a statement, the Fed noted that job gains and economic activity have been “strong.”

See text of FOMC statement

The FOMC expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the committee’s symmetric 2% objective over the medium term,” the Fed said.

This language suggests another tightening in September, when Fed Chairman Jerome Powell will hold a press conference.

Since the Fed last met, the government reported the economy grew at a solid 4.1% annual rate in the second quarter. Economists say that is fast enough to keep downward pressure on the unemployment rate and put more upward pressure on wages.

Inflation has picked up this year, rising 2.2% in the 12 months ending June.

Markets are pricing in about a 90% probability of another gradual rate hike in September and a 70% chance of another in December.

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