TH: European markets left subdued after US Federal Reserve sits on the interest rate fence
A cautious statement by the Federal Reserve on the outlook for the US and world economy has left traders and investors feeling subdued today, with many now questioning whether a rate hike will take place at all in 2015.
Markets had anticipated that interest rates would be left untouched at 0 to 0.25 per cent but most had been hoping for a more upbeat comment. In her statement Fed chair Janet Yellen stressed worries over record low inflation in the US economy and the slowdown in China.
She also highlighted that in her opinion the timing of the rate rise is less important than the path of interest rates. Yellen said: 'Inflation has continued to run below our longer-run objective. We are reasonably confident that inflation will return back to its 2 per cent target over the longer-term.
'We've long expected some slowing in Chinese growth over time, as they rebalance their economy. The question is whether there might be the risk of a more abrupt slowdown than we expect.'
She added: 'In light of the heightened uncertainties abroad… the committee judged it appropriate to wait for more evidence… to bolster its confidence that inflation would rise to 2 per cent in the medium term.'
