The
Federal Open Market Committee had some positive news yesterday. According to
the FOMC’s statement, economic activity is "expanding at a solid pace."
In addition, although inflation is anticipated to decline further in the near
term, the FOMC expects inflation to rise gradually toward 2 percent over the
medium term "as the labor market improves further and the transitory
effects of lower energy prices and other factors dissipate."
Overall,
the news from the FOMC was positive: labor market conditions are improving and household
spending "is rising moderately," and business fixed investment "is
advancing."
However,
despite the progress, the FOMC stated that it will continue to
maintain the current, low-target range for the federal funds rate at 0 to .25
percent. In addition, the FOMC indicated that, even if the economy reaches the FOMC’s
objectives of maximum employment and 2 percent inflation, “economic conditions
may, for some time, warrant keeping the target federal funds rate below levels
the Committee views as normal in the longer run."
