Wednesday, June 15, 2016

FOMC: No Rate Hike as Labor Market Slows

The Federal Open Market Committee (FOMC) decided to maintain the current target for the federal funds rate at 25-50 basis points in June, as the stance of monetary policy remains accommodative.

In a post meeting statement, the Committee noted that growth in the labor market has slowed, and market-based measures of inflation compensation declined during the intermeeting period. During the press conference, Federal Reserve Chair Janet Yellen cited global risks to the U.S. economy, noting that the EU referendum in the United Kingdom “could have consequences in turn for the U.S. economic outlook.”

The Committee adjusted their economic projections, lowering the median funds rate estimates by 30 basis points in 2017, and 60 basis points in 2018. The estimated long-run median also fell by 30 basis points. In contrast, the Committee revised their core PCE estimates upward, raising the estimates by 10 basis points for the present year and in 2017.

Read the FOMC statement.
Visit Banks and the Economy.

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