The Federal Open Market Committee made no changes to its benchmark lending rate on Wednesday, as policymakers commented on the “transitory factors” impacting weaker than forecast US GDP growth in the first quarter.
As expected, the Federal Reserve held its target for the overnight rate at 0 percent to 0.25 percent, unchanged since December 2008. The minutes of this month’s policy meetings will be released in May.
“Information received since the Federal Open Market Committee met in March suggests that economic growth slowed during the winter months, in part reflecting transitory factors,” read the official rate statement on Wednesday.
The statement also said that the federal funds rate may remain at record lows even after employment and inflation approach target levels.
“The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run,” the Fed added.
The comments are in-line with the Fed’s revised summary of economic projections released in March, which showed that any future rate increase would be much more gradual than previously thought. Interest rates are expected to average only 0.625 percent at the end of 2015, revised estimates showed last month.
The Federal Reserve, having been under growing pressure to normalize monetary policy, likely has more scope to keep interest rates low following a disappointing first quarter. The US economy expanded just 0.2 percent annually in the first quarter, following a 2.2 percent gain in the fourth, the Commerce Department reported on Thursday. That was the lowest reading in a year.