- Fed Leaves Rates Unchanged once Again
The Federal Reserve on Wednesday left interest rates unchanged, citing weak inflation rate.
According to the Federal Open Market Committee, labor market remained strong and economic activity continued to rise despite hurricane disruptions.
While the increase in job creation is aiding household spending and surge in gasoline prices continued to pressure prices, inflation for items other than food and energy remained soft.
On a yearly basis, inflation gauges have declined and running below Fed’s 2 percent target. According to the FOMC, this is expected to continue in the near term “but to stabilize around the Committee’s 2 percent objective over the medium term.”
Therefore, the committee seeks to achieve price stability and maximum employment as the rebuilding of hurricane-affected regions will impact economic activity, employment, and inflation in the near term.
However, the storms are unlikely to alter the course of the national economy over the medium term.
The committee voted to maintain interest rates of 1.25 percent to further support labor market conditions and return to 2 percent target.
Also, the FOMC stated that future adjustments to policy rate would depend on incoming data to ascertain labor market condition, inflation pressures and inflation expectations, and international developments. This will help the committee assess realized and expected economic conditions relative to its goals of maximum employment and 2 percent inflation target.
“The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data,” the FOMC said.
Meanwhile, the balance sheet normalization program initiated in October 2017 is proceeding.
The US dollar remained fairly stable and maintain its gain against the Euro common currency, gaining 0.2 percent to $1.1624 as of 3:35 p.m.
