Federal Reserve keeps key interest rate unchanged

WASHINGTON, July 26 (KUNA) -- The U.S. Federal Reserve kept Wednesday its key interest rate unchanged, indicating that the labor market has continued to "strengthen" and that economic activity has been "rising moderately" this year so far.
The Federal Reserve indicated in a statement that "job gains have been solid, on average, since the beginning of the year, and the unemployment rate has declined." It indicated that on a 12-month basis, "overall inflation and the measure excluding food and energy prices have declined and are running below two percent." It added "market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance." The Federal Open Market Committee (FOMC) "continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further." According to the statement, the Committee "decided to maintain the target range for the federal funds rate at one to 1.25 percent." It added "the stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to two percent inflation." "The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run," the statement noted. (end) si.mt