US Federal Reserve holds interest rates steady

By Ovunc Kutlu

NEW YORK (AA) - The Federal Reserve kept its benchmark interest rate unchanged and said weak economic growth in the first quarter was "transitory," according to a statement Wednesday.

The Federal Open Market Committee (FOMC) “views the slowing in growth during the first quarter as likely to be transitory," the statement said, adding that economic activity is expected to expand moderately, labor market conditions will strengthen and inflation will stabilize around 2 percent in the medium-run.

The U.S. economy grew at a sluggish 0.7 percent in the first quarter -- the lowest rate in the last three years.

Just 98,000 jobs were added in March while job gains have averaged 178,000 per month in the past three months. The unemployment rate, however, fell to 4.5 percent -- marking its lowest level in 10 years.

The FOMC said inflation "has been running close to the Committee’s 2 percent longer-run objective."

Despite the recent anemic growth, the FOMC's downplay was viewed by many analysts as leaving the door open for a rate hike next month.

The Fed increased its interest rate in March and December by 25 basis points each time.

All eyes now shift to the government’s April jobs report that is scheduled to be announced Friday.