US Federal Reserve keeping watch on global developments

US Federal Reserve keeping watch on global developments

Federal Reserve Board building on Constitution Avenue is pictured in Washington, U.S.

The US central bank held its policy interest rate steady on Wednesday, but again said it is monitoring "global developments" to decide its next move.

The Fed's policy-setting Federal Open Market Committee left the benchmark interest rate in the target range of 1.5-1.75 percent, as expected.

But policymakers also signaled that they want to see US inflation push a bit higher, to hit the 2.0 percent Fed target.

While there was no mention of the deadly virus outbreak in China, which is seen as posing risks to the global economy, Fed Chairman Jerome Powell is sure to be asked about the potential spillover effects in a press conference at 1930 GMT.

The SARS-like outbreak in China has left over 130 people dead and thousands sickened, while airlines have canceled flights and businesses have been shuttered.

That could undermine other major economies if global supply chains that flow from China are disrupted.

After cutting rates three times last year in their effort to buoy the economy amid President Donald Trump's multi-front trade wars, this is the second policy meeting where the central bank has made no move.

The statement Wednesday repeated that policymakers will "continue to monitor the implications of incoming inflation for the economic outlook including global developments and muted inflation pressures."

The Fed's statement however focuses mostly on the domestic economy, noting that household spending has been "rising at a moderate pace," a slightly less upbeat view than in December.

Slowing consumer spending on top of "weak" business investments and exports could undercut the Fed's ability to meet its inflation goal, which is running at just 1.5 percent.

The statement tinkered with the wording from December to stress that policy is aimed at "inflation returning to the Committee's symmetric 2 percent inflation objective."

The decision, though widely expected, is unlikely to please Trump who has repeatedly berated the Fed and called on Powell to slash rates to zero to supercharge the US economy, which the president says is at a disadvantage against foreign economies with lower rates.

"The Fed should get smart & lower the Rate to make our interest competitive with other Countries which pay much lower even though we are, by far, the high standard," Trump tweeted on Tuesday.

"We would then focus on paying off & refinancing debt! There is almost no inflation-this is the time (2 years late)!"

In a technical move, the Fed also slightly raised the interest it offers to banks with cash on deposit at the central bank, bumping it up to 1.6 percent from 1.55 percent.