Federal Reserve holds interest rates, pivots to ‘patient’ approach to future moves

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Jerome Powell, chairman of the U.S. Federal Reserve.Al Drago/Bloomberg

The Federal Reserve said it will be “patient” on any future interest-rate moves and signaled flexibility on the path for reducing its balance sheet, in a substantial pivot away from its bias just last month toward higher borrowing costs.

The Federal Open Market Committee “will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support” a strong labour market and inflation near 2 per cent, the central bank said in a statement Wednesday following a two-day meeting in Washington.

In a separate special statement on Wednesday, the Fed said it’s “prepared to adjust any of the details for completing balance sheet normalization in light of economic and financial developments.” The central bank also said it would be ready to alter the balance sheet’s size and composition if the economy warrants a looser monetary policy than the federal funds could achieve on its own.

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