WASHINGTON—The Federal Reserve announced that it had left its benchmark federal-funds rate unchanged, after its two-day policy meeting concluded May 1. The central…
WASHINGTON—The Federal Reserve announced that it had left its benchmark federal-funds rate unchanged, after its two-day policy meeting concluded May 1. The central bank signaled more patience ahead.
Fed policymakers gathered on April 30 and May 1 to assess the economic and financial conditions, and decide on monetary policy. As widely predicted, the central bank kept its interest rate target at a range of 2.25 percent and 2.5 percent.
The statement of the Federal Open Market Committee (FOMC) reflected strong economic growth but weak inflation experienced in the first quarter. The Fed officials made no changes to the “patient” policy approach.
Information received since March “indicates that the labor market remains strong and that economic activity rose at a solid rate,” said the policy statement.
The statement recognized that inflation measures have declined and are now running “below 2 percent,” the target inflation set by the Fed.
The weak inflation number, however, will not trigger a rate cut, according to Fed Chair Jerome Powell.
“Our policy stance is appropriate at the moment, and we don’t see a strong case for moving in either direction,” he told reporters after the conclusion of the FOMC meeting.
Powell said the inflation fell because low oil prices at the start of the year had worked through the system.
“We suspect that some transitory factors may be at work thus, our baseline view remains that with a strong job market and continued growth, inflation will return to 2 percent over time,” he said.
The Fed chief, however, did not rule out the probability of rate cuts if the core inflation persistently stayed below 2 percent.
