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Fed leaves rates unchanged

The Federal Open Market Committee did not adjust the federal funds rate on Wednesday, keeping it in a range of 1.75% to 2% as expected.

In a statement following the committee's two-day meeting, the central bank presented a positive economic outlook and said that since its last meeting in June, the labor market has continued to strengthen, economic activity has been rising at a strong rate and inflation remains near its 2% target.

The FOMC said in the statement that it will assess "realized and expected economic conditions relative to its maximum employment objective and its symmetric 2% inflation objective" when determining the timing and size of future rate adjustments. "The committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the committee's symmetric 2% objective over the medium term," the statement said.

The vote to keep the federal funds rate unchanged was unanimous among the eight committee members.

In June, the FOMC raised its benchmark rate 25 basis points to its current level and shifted its projections to four rates hikes in 2018 from three.

Chairman Jerome Powell did not hold a press conference after Wednesday's meeting, but will speak after the next meeting in September. The Fed is expected to raise rates in September and once more in December.

Mike Collins, senior portfolio manager at PGIM Fixed Income, took note of the FOMC's bullish economic outlook Wednesday and said he doesn't anticipate rates to stop rising in the near future. "We almost expect them to hike quarterly: September, December, probably March and June (2019) to get the funds rate right up to that 3% level, which is what they deem to be neutral," Mr. Collins said in an interview. "Personally, I think that's tight. I think they're close to neutral today."