Fed concerned about global economic pressures

Associated Press

WASHINGTON

The Federal Reserve sounded a note of concern Wednesday about how global pressures could affect the U.S. economy, while keeping a key interest rate unchanged.

Six weeks after it raised rates from record lows, the Fed took stock of a more- perilous international picture that could alter its plans for further raising rates. The statement it issued after its latest policy meeting signaled that it might consider slowing future rate hikes if market losses and global weakness don’t abate.

But the Fed did not commit to slowing its pace of rate increases, and stock investors appeared disappointed. The Dow Jones industrial average closed down about 223 points, or 1.4 percent. The Dow had been up slightly before the Fed issued its statement.

Many point to the Fed’s December rate hike as a key factor in the stock market’s tumble in recent weeks. The move amounted to only a small rise in the Fed’s still-extremely low target rate for overnight bank lending. But it signaled that a seven-year period of near-zero rates was ending and that although borrowing costs wouldn’t be rising fast, they would be headed up.

The Fed’s new statement said it’s studying “global economic and financial developments and is assessing their implications for the labor market and inflation.”

Since the Fed raised rates Dec. 16, stocks have plunged, oil prices have skidded and China’s leaders have struggled to manage a slowdown in the world’s second-biggest economy.