Fed holds off on raising interest rates

From The Washington Post:

The Federal Reserve tiptoed ever closer on Wednesday to a decision to raise interest rates but ultimately decided to stand fast, despite expressing growing faith in the health of the U.S. economy and in the case for a rate hike.

The decision, immediately dubbed a “hawkish hold” by Fed watchers, leaves the Fed preparing to make a single move to raise rates before the end of the year. Fed Chair Janet L. Yellen explained it simply: The nation’s central bank, she said, thinks the labor market still has the potential to pull more would-be workers back into the job market, and inflation continues to run below the Fed’s target rate.

“We’re generally pleased with how the U.S. economy is doing,” Yellen said in a news conference after the conclusion of the Federal Open Market Committee’s two-day meeting in Washington. “The economy has a little more room to run than might have been previously thought.”

The normally even-keeled Yellen grew animated during the news conference as she responded to repeated questions about Republican presidential nominee Donald Trump’s recent allegations that the nation’s independent bank has been keeping rates “artificially low” to aid the Obama administration and Democratic nominee Hillary Clinton.

“I can say emphatically that partisan politics play no role in our decisions about the appropriate stance of monetary policy,” Yellen said. Later, she added: “The Federal Reserve is not politically compromised. We do not discuss politics in our meetings.”

The news conference and committee decision that preceded it sent signals that a rate increase is just around the corner. In terms that were stronger than many economists expected, the Fed declared in a statement that the case for a hike ”has strengthened” but that it would wait “for further evidence of continued progress” toward higher growth and faster inflation.

That language suggests the …

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