By CentralBankNews.info
The U.S. Federal Reserve left its benchmark federal funds rate steady at 2.0 – 2.25 percent, as widely expected, but said growth of fixed investments by businesses, such as machinery or technology, had moderated from its rapid pace earlier in the year.
But the Fed’s policy-making arm, the Federal Open Market Committee (FOMC), generally reiterated its view from September about the current strength of the U.S economy, where the labor market had “continued to strengthen and that economic activity has been rising at a strong pace.”
As in recent months, the FOMC also said it expects further gradual increases in the fed funds rate to be consistent with sustained economic expansion and inflation near its 2.0 percent objective.
“Risks to the economic outlook appear roughly balanced,” an unanimous FOMC said, as in September.
Today’s statement by the Fed did not include any update to its economic forecast from September when the fed funds rate was seen averaging 2.4 percent this year, implying one more rate hike, with economists looking for this hike to come at the Fed’s meeting in December.
The Fed has already raised its rate three times this year by a total of 75 basis points and 8 times since it began tightening its policy in December 2015.
The Board of Governors of the Federal Reserve System issued the following statement:
“Information received since the Federal Open Market Committee met in September indicates that the labor market has continued to strengthen and that economic activity has been rising at a strong rate. Job gains have been strong, on average, in recent months, and the unemployment rate has declined. Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier in the year. On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent. Indicators of longer-term inflation expectations are little changed, on balance.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective over the medium term. Risks to the economic outlook appear roughly balanced.
In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 2 to 2-1/4 percent.
In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. 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.
Voting for the FOMC monetary policy action were: Jerome H. Powell, Chairman; John C. Williams, Vice Chairman; Thomas I. Barkin; Raphael W. Bostic; Lael Brainard; Richard H. Clarida; Mary C. Daly; Loretta J. Mester; and Randal K. Quarles.”
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