The meeting of the Federal Reserve’s Federal Open Market Committee ended Wednesday with the Committee’s customary post-meeting statement recapping monetary policy matters considered by the Committee. Members voted not to change the current target rate range of the federal funds rate. The current rate range of 2.25 percent to 2.50 percent.
Federal Funds Target Rate Range: Monetary Policymakers Remain “Patient”
FOMC members cited low inflation pressures, global and domestic economic and financial developments as supporting the Committee’s decision to leave the Federal funds rate unchanged despite recent political pressures to lower the rate and increase the Fed’s accommodative stance toward boosting the economy.
FOMC members evaluated actual and expected economic conditions, labor markets and readings on global and domestic current events and economic news. Based on their assessments, FOMC members again asserted their willingness to be patient concerning Committee decisions to change the federal funds rate range.
The Fed’s dual mandate of supporting maximum employment and stable pricing as indicated by low national unemployment rates and the benchmark inflation rate of two percent are foundational influences on any decision about changing the Fed’s key interest rate range; the national unemployment rate has hovered near a historically low rate of 3.80 percent in recent months and inflation is also below the Fed’s benchmark of two percent.
Fed Chair: No Strong Case for Moving Federal Funds Rate in Either Direction
Federal Reserve chair Jerome Powell said during his post-meeting press conference that FOMC members did not see a strong case for moving the federal funds rate in either direction. Mr. Powell cited improvements in global economic conditions within Europe and China and said that trade negotiations with China and Japan were also improved.
When asked about lowering the Federal funds rate based on lower inflation rates, Chairman Powell said that maintaining inflation near two percent was important, but viewed lower inflation during the first quarter of 2019 as a result of transitory influences. He reassured his audience that short-term fluctuations in the inflation were not considered a problem.
Chairman Powell said that the Fed is not influenced by political pressure and that the Fed’s monetary policy is not based in any way on political commentary or pressures. Mr. Powell said the outlook for domestic economic growth was good based on consumer spending and business investments. He said that resolution of trade issues would likely improve consumer sentiment.