Fed Holds Interest Rates Steady For Now

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Fed Holds Interest Rates Steady For Now

by: Ryan Smith

As expected, the Fed is holding steady on interest rates for now.

At its meeting today, the Federal Open Market Committee chose to forego a rate hike for now, citing soft exports and inflation that continues to run below the Fed’s 2% target.

“Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent,” the Fed wrote in a release. “The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.”

Most economists expected the Fed to maintain interest rates for now, with many expecting the first of two planned rate hikes in June. However, the Fed said it would determine the timing of future adjustments “relative to its objectives of maximum employment and 2 percent inflation.”

“This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments,” the Fed stated. “In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal.”

The FOMC said it expects that economic conditions will “warrant only gradual increases in the federal funds rate.” The rate is likely to remain below levels “expected to prevail in the longer run” for some time, the Fed stated.

Source: http://www.mpamag.com/