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The FOMC Holds Target Rate at 5.25%

The Federal Reserve stays data-dependent:

Economist's View: The FOMC Holds Target Rate at 5.25%: Here's a summary of the differences between today's Press Release and the Press Release from the previous meeting:

  1. The Committee added the word "substantial" to its description of the housing market slowdown.
  2. The new statement recognizes that "recent indicators have been mixed," but still says, as before, that the economy is "likely to expand at a moderate pace" with the added qualification "on balance over coming quarters."
  3. Jeffrey M. Lacker continued his dissent, voting against the proposal to leave rates unchanged. He prefers an increase in the target rate.
  4. The Committee notes, as it did last meeting, that inflation risks remain and further rate moves will depend upon how these risks play out. It does not mention risks to economic growth explicitly as it does with inflation. For example, it talks about "The extent and timing of any additional firming that may be needed," but not about the potential for easing.

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