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Fed Declines Rate Hike, Cites Growing Labor Market and Economy
Thursday, August 2, 2018 6:55 AM

The Federal Open Market Committee yesterday chose to maintain current rates at the close of its two-day policy meeting. In a subsequent statement, the Fed cited a strengthening labor market and rising economic activity for not raising rates.

"Information received since the Federal Open Market Committee met in June indicates that the labor market has continued to strengthen and that economic activity has been rising at a strong rate," the statement reads. "Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low. Household spending and business fixed investment have grown strongly. 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.

"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 1-3/4 to 2 percent. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation.

"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."

The next meeting of the FOMC is Sept. 25-26, where rate hikes will again be considered.