Fed: Growth Slowed Due to ‘Transitory Factors’

The Federal Reserve Open Market Committee in its April 29 statement noted that economic growth slowed during the winter months, partly due to “transitory factors,” and that labor market conditions were largely unchanged since the last meeting. Although growth slowed, the committee expects that growth will expand at a “moderate pace,” and view risks to the economic outlook and labor markets as “nearly balanced.”

The FOMC cited a number of conditions which had weakened over the winter, including declining growth in household spending, even as real incomes grew due to lower energy prices. Growth in business fixed investment also fell.

The committee expects inflation to remain low in the near term, but rise toward 2 percent over the medium term as the labor market improves and the “transitory effects” of low energy and import prices dissipate.

In discussing the target range for the federal funds rate, the committee reaffirmed its view that the current rate of 0-0.25 percent is appropriate. Once again, the statement noted that it would be data driven in determining when to raise rates, but did not include any calendar references as to when.