Investing.com -- The Federal Reserve, as expected, held short-term interest rates steady on Wednesday afternoon, leaving rates unchanged for the fourth consecutive meeting since their historic rate hike last December.
Citing a slowing labor market and subdued inflation, the Federal Open Market Committee (FOMC) left the target range on its benchmark Federal Funds Rate unchanged at a level between 0.25 and 0.50%. In December, the FOMC abandoned a seven-year zero interest rate policy by lifting the Fed Funds Rate by 25 basis points. It represented the first rate hike by the Fed in nearly a decade. There were no dissents in June's monetary policy statement; previously Kansas City Federal Reserve president Esther George dissented in the Fed's prior two meetings.
"The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will strengthen," the FOMC said in the statement. "Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further."
While the FOMC left its median Federal Funds Rate forecast for 2016 unchanged at 0.9%, six members of the FOMC recommended just one rate hike by the end of the year. In the FOMC's last projections in March, only one member of the Committee recommended a single rate hike in 2016. By comparison, the FOMC said in median projections in December that it could implement as many as four rate hikes this year.
On a long-term basis, the FOMC lowered its median projection for the Fed Funds Rate in 2017 by 0.25% to 1.6%. The FOMC also cut the median projection on the Fed Funds Rate outlook for 2018 by 0.625% to 2.4%.
Following the release, the Dow Jones Industrial Average stood at 17,753.92, up approximately 70 points on the day, while the S&P 500 Composite gained more than eight points to 2,075.12. Both indices were relatively flat before the Fed issued its statement. Both the Dow and S&P 500 closed down by more than 0.15% on the session, following a late sell-off over the final half-hour of Wednesday's session.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other currencies, lost more than 0.55% to an intraday low of 94.48, extending slight losses earlier in the session. The index has crashed more than 5% since early-December.
EUR/USD gained more than 0.6% to 1.128, moving slightly upward following the release. Yields on the U.S. 10-Year, meanwhile, fell four basis points to 1.57%, remaining near one-month lows.
The FOMC is scheduled to meet next on July 26-27.