Fed foresees no rate hikes amid unusually low inflation

WASHINGTON (AP) — The Federal Reserve left its key interest rate unchanged Wednesday and signaled that no rate hikes are likely in coming months amid signs of renewed economic health but unusually low inflation.

The Fed left its benchmark rate — which influences many consumer and business loans — in a range of 2.25% to 2.5%. Its low-rate policy has helped boost stock prices and supported a steadily growing economy.

A statement from the Fed spotlighted its continuing failure so far to accelerate annual inflation to at least its 2% target rate. The Fed's preferred 12-month inflation barometer is running at about 1.5%. In pointing to persistently low inflation, the central bank may be raising expectations that its next rate change, whenever it happens, could be a rate cut rather than a hike. The Fed cuts rates when it's trying to stimulate inflation or economic growth.

Soon after the Fed issued its statement, stock prices rose modestly. And the yield on the 10-year Treasury note, which influences mortgages and some other loans, fell slightly.

The Fed also made a technical adjustment Wednesday to reduce the interest it pays banks on reserves as a way to keep its benchmark rate inside its approved range, rather than at the upper end of that range.

The central bank's decision to make no change in the policy rate policy — approved on a 10-0 vote — had been expected despite renewed pressure from President Donald Trump for the Fed to cut rates aggressively to help accelerate economic growth.

The Fed expressed offered a more upbeat view of the economy, saying "economic activity rose at a solid rate." In March, the Fed had said it appeared that growth had slowed from the fourth quarter of last year.

The generally brighter outlook for the economy and the stock market...