The Federal Reserve on Wednesday announced it will keep the federal funds rate within a zero to 0.25% target range for at least two years, echoing a decision made after the Federal Open Market Committee's March meeting in Washington.
The Wednesday statement cited similar economic conditions as the committee did in its March 13 meeting, including a “moderately expanding economy” and more business investment.
However, the Wednesday statement said, “Strains in global financial markets continue to pose significant downside risks to the economic outlook.”
Nine of the 10 committee members voted to keep what they called “exceptionally low levels” for the federal funds rate through late 2014, while Richmond Federal Reserve Bank President Jeffrey Lacker disagreed.
“The Fed is citing the backup in yields that we've seen in Spain and Italy,” Richard Skaggs, senior equity strategist for Loomis Sayles, said in an interview.
Mr. Skaggs did not see the Fed's concern over global risks as enough to advance the argument for another round of quantitative easing. “We are in a ‘no-QE3' camp unless or until it weakens here. U.S. economic data for the most part remains slow but steady,” he said.
The committee's next meeting is June 19-20.