Statement released by the Federal Reserve’s Federal Open Market Committee on Wednesday following a two-day meeting.

Highlighted Points

• Fed leaves interest rates unchanged at 1-1.25 per cent.
• But it keeps alive possibility of a further rise this year Balance sheet reduction to begin in October .
• Dollar rallies against euro and yen, Treasuries fall.
• Job gains have remained solid in recent months, and the unemployment rate has stayed low. 
• Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters. 
• On a 12-month basis, overall inflation and the measure excluding food and energy prices have declined this year and are running below 2 percent.
• Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.
• The Committee seeks to foster maximum employment and price stability.
• The Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further. 
• Higher prices for gasoline and some other items in the aftermath of the hurricanes will likely boost inflation temporarily; apart from that effect, inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee’s 2 percent objective over the medium term. 
•  In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1 to 1-1.25 percent. 
• The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation. 
• Most Fed policymakers stuck with forecasts for another rate rise in 2017 — probably in December — as well as three further increases next year.
• As had been widely expected, the US central bank said it would start paring back its multi-trillion dollar balance sheet in October, shifting its crisis-era stimulus programme into reverse.