WASHINGTON–The Federal Open Market Committee declined to raise interest rates at its meeting earlier today, but indicated it is still leaning toward an increase in 2015. The FOMC has two meetings remaining this year in October and December. For now, the FOMC said data reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate
“Information received since the Federal Open Market Committee met in July suggests that economic activity is expanding at a moderate pace,” the FOMC said in a statement. “Household spending and business fixed investment have been increasing moderately, and the housing sector has improved further; however, net exports have been soft. The labor market continued to improve, with solid job gains and declining unemployment. On balance, labor market indicators show that underutilization of labor resources has diminished since early this year.”
The FOMC said inflation has also continued to run below its longer-run objective.
“Nonetheless, the Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate,” it said. “The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced but is monitoring developments abroad. Inflation is anticipated to remain near its recent low level in the near term but the Committee expects inflation to rise gradually toward 2% over the medium term as the labor market improves further and the transitory effects of declines in energy and import prices dissipate. The Committee continues to monitor inflation developments closely.”
The FOMC said it anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium term.