Fed decides to keep rates in check

May 2, 2018

The Federal Open Market Committee decided to maintain the target range for the federal funds rate at 1-1/2 to 1-3/4 percent. According to a press release by the Federal Open Market Committee, “the labor market has continued to strengthen and that economic activity has been rising at a moderate rate. Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low.” Additionally, both headline and core inflation have moved close to 2 percent. The Fed sees its latest move to keep the federal funds rate in check as keeping with its dual mandate to “foster maximum employment and price stability.”

The Fed states that its stance on monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation. However, the timing and the size of future adjustments to the target range of the federal funds rate will depend largely on the committee assessment of realized and expected condition of the labor market, inflation pressures and international developments.

Recent data suggest that growth of household spending moderated from its strong fourth-quarter pace, while business fixed investment continued to grow strongly.

The Committee expects that, with further gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace in the medium term and labor market conditions will remain strong.

According to the Fed, “risks to the economic outlook appear roughly balanced.”


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