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Economy in Brief

FOMC Holds Rates Steady; Sees Moderate Economic Growth and Stable Inflation Expectations
by Tom Moeller  July 29, 2015

At today's meeting of the Federal Open Market Committee, the Fed indicated that growth in consumer spending is moderate and the housing sector shows signs of improvement. Together with soft business investment and net exports, the labor market has continued to improve. Labor market slack has diminished this year but inflation remains low, and long-term price expectations have been stable.

Moderate economic growth was expected to continue while risks to the outlook were seen as balanced. Inflation is expected to rise to the Fed's 2 percent objective.

As a result of these views, the Fed elected to leave its target for the federal funds rate at 0 to 1/4 percent. The Fed indicated that "even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run."

The press release for today's FOMC meeting can be found here.

The backdrop to today's meeting was stable M2 growth of 5.8% y/y and monetary base growth of -0.12% y/y. In addition, the foreign exchange value of the U.S. dollar has risen 20.7% during the past year.

Haver's SURVEYS database contains the economic projections from the Federal Reserve Board.

Current Last 2014 2013 2012 2011
Federal Funds Rate, % (Target) 0.00-0.25 0.00-0.25 0.09 0.11 0.14 0.10
Discount Rate, % 0.75 0.75 0.75 0.75 0.75 0.75
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