Fed Holds Rates Steady

At its meeting today, the Federal Open Market Committee (FOMC) unanimously voted to hold the target range for the federal funds rate steady at 1.25 to 1.5 percent. The committee most recently raised rates by 25 basis points in their December 2017 meeting. The central bank has projected three hikes in 2018, and markets widely expect the first increase to occur in the FOMC’s next meeting, scheduled in March.

The FOMC recognized that economic activity and the labor market have continued to strengthen. Committee members expect “that, with further gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will remain strong.”

Committee members acknowledged that both inflation and core PCE (personal consumption expenditures) remained below the 2% target but expect to reach the objective in the medium term.

This was the final policy meeting of Chairwoman Janet Yellen’s four-year term. Fed governor Jerome Powell is scheduled to be sworn in as chairman on Monday, February 5th.

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About Stephen Newton

Stephen Newton is an economic research associate at ABA.
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