Stocks rise as the Fed keeps interest rates steady

The Fed now sees a “strong” US economy.

The Federal Reserve kept interest rates unchanged on Wednesday but provided new updates to its assessment of the economy.

Jennifer Schoenberger of Yahoo Finance reports:

In its statement on Wednesday, the Fed raised its assessment of the economy to “strong” in the third quarter from “strong” in September.

The central bank noted that job gains had “moderated”, after noting in September that job growth had “slowed” over the previous period between meetings.

“Recent indicators suggest that economic activity expanded at a strong pace in the third quarter,” the Fed said. “Job gains have eased since earlier in the year but remain strong, and the unemployment rate remains low. Inflation remains high.”

This updated characterization of the economy comes after third-quarter GDP data published last week showed growth posted a whopping 4.9% annual rate during the summer months, driven in large part by strong consumer spending, punctuated by a surge in retail sales in September.

The Fed reiterated that future interest rate hikes will be conditional on the impact of previous interest rate increases on the economy, lagged effects, and economic developments.

The decision to keep interest rates constant was unanimous.

“In assessing the appropriate stance for monetary policy, the Committee will continue to monitor the effects of the information received on the economic outlook,” the statement said. “The Committee will be prepared to adjust its monetary policy stance as appropriate if risks emerge that may impede the achievement of the Committee’s objectives.”