US Fed leaves key rates unchanged, says overall US economy strong

Increased inflation concerns loom ahead of Fed's committee meeting

FOMC announcement: Fed keeps interest rates steady

The US Federal Reserve held its base interest rate steady last night, putting it on course for a final rise of the year at the end of its policymaking meeting next month. The Federal Open Market Committee, the governing board of the Fed, left the door open for another rate hike in December.

The benchmark federal funds rate remains in a range of 2 percent to 2.25 percent.

The Fed in September raised its benchmark federal funds rate for the third time this year, citing the strong labor market and healthy spending by consumers and businesses.

Data released in late October showed the United States economy grew at a 3.5 per cent annual rate in the third quarter, well above the roughly 2 per cent annual growth pace the Fed and many economists regard as the underlying trend.

That was well above the roughly 2% rate many economists and the Fed believe is the underlying trend. Inflation remained near its 2 per cent target, unemployment fell, and risks to the economic outlook were still felt to be "roughly balanced".

"What the statement overall signals is that they're still on track to raise rates", said Brad McMillan, chief investment officer at the Commonwealth Financial Network.

"December is in the plan and they don't see any reason to slow or stop the rate increases".

Policymakers, however, noted that business investment had "moderated from its rapid pace earlier in the year", a possible drag on future economic growth.

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