The Federal Reserve’s policy committee Tuesday noted recent modest improvement in labor market conditions but otherwise maintained its cautious assessment of economic conditions.
A statement issued after the meeting of the Federal Open Market Committee said the committee had decided to keep the federal funds rate between zero and 0.25%.
The Fed’s decision to sit tight may reflect an assessment that incremental improvements in the economy allow the central bank to close out a year of extraordinary policy efforts without offering up additional steps to calm market players, noted Andrew M. Smock, executive vice president and co-chief investment officer with Merganser Capital Management, in an interview.
Both equities and the yield on 10-year U.S. treasuries fell following the Fed’s statement, a sign that market participants were hoping for something more from the central bank. All other things being equal, Mr. Smock said the Fed’s decision Tuesday not to offer up any new incentives to trade could leave bond traders and managers closing out their positions in thin trading for the rest of the year.
