MILLENNIUM AIM COMMENTARY
The FOMC has chosen to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent. Economic activity has much improved and rose “at a solid rate” from the last meeting in March. Job gains and unemployment remain solid, but household spending and business fixed investment did slow in the first quarter. Overall inflation has continued to decline and remains below the Committee’s 2 percent target. The Committee continues to remain patient in determining future adjustments for the federal funds rate target. There is currently a 0 percent chance that the Committee will implement any rate hike in 2019, with the probability of a cut increasing through January 29, 2020.
FEDERAL OPEN MARKET COMMITTEE – FULL TEXT STATEMENT
Information received since the Federal Open Market Committee met in March indicates that the labor market remains strong and that economic activity rose at a solid rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Growth of household spending and business fixed investment slowed in the first quarter. On a 12-month basis, overall inflation and inflation for items other than food and energy have declined and are running below 2 percent. On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of longer-term inflation expectations are little changed.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent. The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective as the most likely outcomes. In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.
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. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.
Voting for the FOMC monetary policy action were: Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; James Bullard; Richard H. Clarida; Charles L. Evans; Esther L. George; Randal K. Quarles; and Eric S. Rosengren.
SOURCE: Federal Reserve Board