Fed says it's patient about raising rates

Fed says it’s patient about raising rates

The Federal Reserve is reiterating that it will be “patient” in raising rates from record lows but is signalling greater concern about excessively low inflation.

By Staff, with files from The Associated Press | January 28, 2015 | Last updated on January 28, 2015

1 min read

The Federal Reserve is reiterating that it will be “patient” in raising rates from record lows but is signalling greater concern about excessively low inflation.

In a statement after its latest policy meeting, the Fed notes that inflation remains well below its 2% target. And it says the factors holding down inflation have intensified since its last meeting in December. Inflation has stayed ultra-low partly because of a plunge in energy prices and a steadily strengthening dollar.

Read: Canadian banks cut home lending rates

The Fed’s decision was unanimous, writes CIBC World Markets economist Andrew Grantham in a note to analysts. He says it’s possibly because “new voters [are] unwilling to show their hands until the next meeting, when interest rate and economic projections are updated.”

The Fed says that inflation will likely decline further before starting to rise gradually.

The Fed’s new concerns about low inflation could affect when it decides to raise its key short-term rate from near zero. Many economists have forecast a Fed rate hike in June but some have pushed back that timetable.

The Fed’s assessment of the overall economy was upgraded to a “solid pace” from the moderate pace they saw before, notes Grantham.

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