The US Federal Reserve on Wednesday left the interest rate unchanged for now but indicated a hike was possible later this year though a decision on the timing has not been taken yet.
“Certainly an increase this year is possible,” Fed chair Janet Yellin said at a news briefing at the end a two-day-meeting of the central bank’s top decision meeting body.
“We could certainly see data that would justify that.” But, she added, “no decision has been made by the committee as to what the right timing is for an increase.”
“It will depend on unfolding data.”
But when asked what sort of data could trigger a rate hike, Yelling said, “It would be wrong for me to provide you a road map that was as simple as `if the unemployment rate declines to x,’” Ms. Yellen said.
A range of factors must be considered.
This was the strongest indication yet of a coming interest rate hike, the first hint of which in the summer of 2013 had roiled economies the world over, pummeling Indian rupee.
When asked if a repeat of the volatility outside the US would influence the Fed’s decision, she said, “It is hard to have great confidence in predicting what the market reaction will be.”
But the Fed will try and minimize the impact on other countries. The rate has been kept at near-zero for years know to pump cash into the US economy to help it out of recession by boosting demand and growth and create jobs.
In a statement issued at the end of the Federal Open Market Committee, the top decision making body, the Fed said that the “the Committee today reaffirmed its view that the current 0 to 1/4% target range for the federal funds rate remains appropriate”.