Fed leaves key rate unchanged at Yellen’s final meeting

FILE - In this Wednesday, Sept. 20, 2017, file photo, Federal Reserve Chair Janet Yellen gets up from her seat at the conclusion of a news conference following the Federal Open Market Committee meeting in Washington. Yellen, the first woman to lead the world’s most influential central bank, will step down when her term expires on Feb. 3, 2018. She will be succeeded by Fed board member Jerome Powell. (AP Photo/Pablo Martinez Monsivais, File)

The Federal Reserve has left its benchmark interest rate unchanged but signaled that it expects to resume raising rates gradually to reflect a healthy job market and economy.

At Janet Yellen’s final meeting as chair Wednesday, the Fed kept its key short-term rate in a still-low range of 1.25 percent to 1.5 percent. It said in a statement that it expects inflation to finally pick up this year and to stabilize around the Fed’s target level of 2 percent. In its previous statement, the Fed had predicted that inflation would remain below its target rate.

The Fed also indicated that it thinks the job market and the overall economy are continuing to improve.

“Gains in employment, household spending and business fixed investment have been solid,” its statement said.

The central bank said it expects the strengthening economy to warrant further gradual increases in its benchmark rate. Those additional rate hikes would likely lead, in time, to higher rates on some consumer and business loans.