Fed Holds Rates Steady

The Federal Reserve Open Market Committee (FOMC) unanimously voted to hold the target range for the federal funds rate steady at 0.75 to 1 percent at their May meeting. The Committee had raised rates by 25 basis points at their previous meeting in March with the expectation of two more rate increases this year.

The FOMC recognized that growth in economic activity, and especially in consumer spending, slowed in the first quarter, but noted that it is “likely to be transitory and [the Committee] continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace.” The Committee also pointed out that the labor market has continued to strengthen and business investment has firmed.

There were no clear signals indicating a move at the upcoming June meeting, but the Committee stated their expectation of economic conditions continuing to evolve in a manner that will warrant gradual increases in the federal funds rate. Fed officials noted their intent to maintain the existing policy regarding the handling of the balance sheet, with no further clues as to when or how the portfolio reinvestment policy could change in the future.

Read the FOMC statement.

Email This Post Email This Post

About Jack McCabe