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Powell: FOMC not planning to cut rates
The Federal Open Market Committee (FOMC), as expected, left rates unchanged at the end of its two-day monetary policy setting meeting. Federal Reserve Chairman Jerome Powell after the meeting also indicated that the committee does not plan to cut rates anytime soon.
"NAFCU does not believe a rate cut this year is likely given the strength of the labor market and the recovery of economic indicators, on balance, since the early part of this year," said NAFCU Chief Economist and Vice President of Research Curt Long in a Macro Data Flash report. "Low inflation is a concern, and if price growth were to slow further, the committee would have to consider a rate cut. However, rising wage growth and well-anchored inflation expectations should prevent that scenario from playing out."
The federal funds target rate stands at a range of 2.25 to 2.5 percent, which was set at the end of the FOMC's December meeting. The committee will remain "patient" as it considers further interest rate moves.
The committee also indicated it will continue to reduce its securities holdings; it plans to end its balance sheet reduction program in September.
Long also flagged in the Macro Data Flash report that "due to the fact that the effective Fed funds rate has been near the top of the FOMC's range, the committee cut the interest on excess reserves (IOER) by 5 basis points to 2.35 percent."
The FOMC will next meet June 18-19.