As you expected, no rate hike came from the two-day FOMC meeting today at 2:15 PM EST. The target Fed Funds Rate was kept at the same 0.00% to 0.25% that has been the case for over a year. As far as the keeping rates low for “an extended period,” the “extended period” was also kept the same.
What was expected (at least by us) was a further economic outlook upgrade, so to speak. That is mostly what came. The FOMC noted that economic activity has continued to strengthen. It noted further that the labor market is starting to improve, but unemployment remains high and the pace of recovery is likely to stay moderate for a time. Noted was that financial markets remain supportive of growth and household spending is picking up but remains constrained.
On the inflation front, the FOMC said that inflation is expected to remain subdued for some time and that longer-term inflation expectations remain stable.
The vote was 9 to 1 in favor of keeping rates steady today. Kansas City Fed Governor Hoeing has been the sole vote of late for a hike due to imbalances being created with the current monetary policy.
The full statement is here from the FOMC.
JON C. OGG
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