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FOMC leaves rates, policy unchanged
The Federal Open Market Committee (FOMC) left the federal funds target rate and monetary policy unchanged after a two-day meeting that concluded yesterday.
"The FOMC evidently liked the reaction to the 'patient' mantra it has been preaching since the previous meeting," said NAFCU Chief Economist and Vice President of Research Curt Long in a NAFCU Macro Data Flash report. "The statement emphasizes that, while the committee still anticipates further economic growth, it is prepared to adjust those views if that view is not realized.
"Coupled with the separate statement from the Fed announcing a willingness to revisit the pace of balance sheet tapering, this was a dovish signal from the Fed. The best guess at this point is for no more than one rate hike in 2019," Long added.
In its statement, the committee commented on the strengthening labor market and increased economic activity, and also noted that "job gains have been strong, on average, in recent months, and the unemployment rate has remained low." Regarding inflation, the FOMC said that on a "12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent. Although market-based measures of inflation compensation have moved lower in recent months, survey-based measures of longer-term inflation expectations are little changed."
Federal Reserve Chair Jerome Powell also held a press conference after the meeting where he highlighted the importance of inflationary pressures when determining future rate hikes.
The Fed will continue to monitor economic and financial developments as they determine future adjustments to the target range for the federal funds rate. Currently, the target remains at a range of 2.25 to 2.5 percent
The FOMC will meet again March 19-20.