The U.S. Federal Open Market Committee decided today to leave rates unchanged, keeping its target for the federal funds rate at 1%. The decision to stand pat on rates was expected by market watchers.

In its news release the FOMC said that it believes the risks to the economy are more or less balanced between the upside and the downside. However, it remains worried about the lack of inflation. “The committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. In contrast, the probability, though minor, of an unwelcome fall in inflation exceeds that of a rise in inflation from its already low level,” it said.

“The committee judges that, on balance, the risk of inflation becoming undesirably low remains the predominant concern for the foreseeable future,” it said.

The Fed also suggested that rates will stay low for the foreseeable future. “In these circumstances, the Committee believes that policy accommodation can be maintained for a considerable period.”

The Fed indicated that it believes the current accommodative stance of monetary policy and strong productivity growth, “is providing important ongoing support to economic activity”. It noted that the latest data shows that spending is firming, but the labour market has been weakening. Business pricing power and increases in core consumer prices remain muted, it found.