The decision by the United States Federal Reserve not to raise interest rates was "appropriate" given the diverse variables involved and the state of the international marketplace, a leading spokesman for the Japanese government said Friday. The Fed "made the decision appropriately by monitoring various situations," said Japanese Chief Cabinet Secretary Yoshihide Suga during a news conference.
The decision to keep interest rates low was announced Thursday by Federal Reserve Chairwoman Janet Yellen. The announcement came after a two-day meeting with the policymakers of the American central bank. Interest rates could rise soon, as the Fed has two more planned policy meetings this year in which the rate could be increased.
"In light of the developments that we have seen and the impacts on financial markets, we want to take a little bit more time to evaluate the likely impacts on the United States," Yellen said.
The interest rate is currently close to zero, and has been that low since 2008.
During the news conference Thursday, Yellen said that the central bank wanted to ensure that American action on interest rates wouldn't throw the country's domestic economy off track. She cited concerns with market instability in Asian markets like China, where a market shakeup late last month sparked by the country deflating its currency, the yuan, caused acute anxiety with international investors and led some to worry that the United States could fall into another recession.
Following the announcement, stocks oscillated Thursday. Initially, the main indexes shot up, but that surge was abated. Investors are concerned with when the interest rate hike could come, as it will be the first in nearly a decade following the Great Recession.
The decision to keep rates low was explained as a strategy to avoid international trade head winds that could damage the U.S. economy and subdue inflation. There have been recent economic indicators that show a strengthening American labor market, however, inflation is below the 2 percent mark the Fed would like to see.
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