US Federal Reserve leaves rates unchanged
02 Oct 2015
By Shadforth Financial Group
One of the biggest questions for global share markets during 2015 has been when the US Federal Reserve will lift short-term interest rates. US interest rates have been near zero since the Global Financial Crisis to encourage borrowing and boost growth. Low interest rates have been one of the major contributors behind the six-year bull market in US stocks.
Due to volatility in financial markets and a slowdown in global economic growth, the Federal Reserve left its key federal funds rate unchanged following its September meeting. Market expectations were for the Federal Reserve to lift rates, however it decided to hold off for at least one more month.
The lifting of interest rates could be seen as the official end to the Global Financial Crisis.
The market reaction following the announcement was muted, with investors pushing the share market higher in the days leading up to the announcement on expectations the Federal Reserve would leave rates unchanged.
During a press conference after the announcement, Federal Reserve Chair Janet Yellen stressed that the path of the Fed's first rate increase in nearly a decade is more important than its timing. Yellen specifically mentioned that October was a possibility and that they expect to start increasing this year.
Many investors now expect the Federal Reserve to hold off raising rates until 2016.