Investing.com - The Federal Reserve voted Wednesday not to raise its key interest rate, and said it expected to begin normalising its $4.5 trillion balance sheet "relatively soon".
In a move largely expected in financial markets, the policymaking Federal Open Market Committee (FOMC) agreed to keep its benchmark rate target at 1%-1.25%.
The accompanying statement revealed concerns among policymakers about the recent slowdown in inflation, which remained well below the central bank’s target of 2%.
Inflation data has undershot market expectations for four-straight months, showing little sign of improvement but policymakers remained optimistic that the pace of inflation will stabilise over longer-term.
"Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance," the Federal Reserve July policy statement noted.
The Federal Reserve statement also noted that interest rates are likely to remain low for "some time", highlighting that increases in its benchmark rate will depend on incoming economic data.
As was widely expected the Federal Reserve held off launching its balance sheet reduction programme but suggested that the Committee would move to normalise its $4.5 trillion balance sheet "relatively soon".
Financial markets moved lower after the rate decision, with the dollar and treasury yields touching session lows while gold turned positive, as market participants judged the Fed's statement as dovish.
The dollar fell 0.13% to trade at 93.80 while the U.S. 10-Year added to losses falling 0.67% to 2.314.
Gold Futures, traded positive at $1,253.09.