Citing Labor Market Slowdown, Fed Votes To Keep Rates Where They Are

As was expected, the Federal Open Market Committee voted this week to postpone raising short-term interest rates until the economy, and in particular, the job market, improves a little more.

Citing that the “pace of improvement in the labor market” slowed in April, the committee said in a statement on Wednesday that it has decided to “maintain the target range for the federal funds rate at 0.25 percent to 0.50 percent.”

The committee said that although “growth in household spending has strengthened” and the “housing sector has continued to improve,” inflation continues to run below its 2% longer-run objective, “partly reflecting earlier declines in energy prices and in prices of non-energy imports.”

The committee said it will continue to monitor key economic indicators and “expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate.”

Whether the next “gradual” increase will come before this year’s end is anyone’s guess at this point – but according to a Reuters report, some analysts are forecasting that the Fed will raise rates twice this year.


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