The Federal Reserve announced it would once again keep the
target range for the federal funds rate at 5-1/4 to 5-1/2 percent while pointing
to positive economic indicators of continued growth, despite lingering
inflation concerns.
The Federal Open Market Committee (FOMC) highlighted strong
job gains and sustained low levels of unemployment following its most recent
meeting and vote. Committee members consider a diverse group of factors in
their assessments, such as labor market conditions, inflation pressures,
financial developments and international factors.
Although inflation
remains relatively high, the committee cited signs of easing – an observation
cited in several of its previous meeting minutes.
The Fed also reiterated its commitment to working toward
maximum employment and a 2 percent inflation rate in the long term. As
uncertainties in the country’s economic outlook persist, the agency indicated it
intends to keep inflation risks at the forefront of its attention.
“Inflation has eased notably over the past year but remains
above our longer-run goal of 2 percent.
Estimates based on the Consumer Price Index and other data indicate that
total PCE (Personal Consumer Expenditure) prices rose 2.5 percent over the 12
months ending in February; and that, excluding the volatile food and energy
categories, core PCE prices rose 2.8 percent,” Fed Chair Jerome Powell said in
a statement. “Longer-term inflation expectations appear to remain well
anchored, as reflected in a broad range of surveys of households, businesses,
and forecasters, as well as measures from financial markets.”
Powell added that the agency’s median projection is that
inflation will fall to 2.4 percent this year, 2.2 percent next year and 2
percent in 2026.
As it has previously, the FOMC noted its reluctance to
reduce the target range until its members see reason to feel more confident that
inflation is under control and on a consistent track toward the 2 percent goal.
The committee said it plans to continue recommending the reduction of Treasury
securities holdings and mortgage-backed securities, as previously announced.
Based on its evaluation, the committee asserted there is an
ongoing need to monitor incoming data and its implications for the economic
outlook so the Fed can adjust its monetary policy stance if emerging risks call
for such a move.