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Economy in Brief

FOMC Holds Rates Steady; Sees Moderate Economic Growth and Stable Inflation Expectations
by Tom Moeller  September 17, 2015

At today's meeting of the Federal Open Market Committee, the Fed indicated that, "Recent global economic and financial developments may restrain economic activity and are likely to put further downward pressure on inflation in the near term."

As a result, the fed funds rate was left unchanged. The Fed indicated 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 percent objective over the medium term."

For now, "household spending and business investment have been rising moderately and the housing sector has improved further. The labor market continued to improve" but the Fed is "monitoring developments abroad."

As for prices, "market-based measures of inflation compensation moved lower; survey-based measures of longer-term inflation expectations have remained stable."

Economic projections accompanying today's meeting called for 2.2% growth in real GDP this year, 2.4% growth next year and a 2.2% advance in 2017. The "core" PCE price index was expected to rise 1.4% this year, 1.7% in 2016 and 1.9% in 2017. The unemployment rate was projected to average 5.1% in 2015 then 4.8% both in 2016 and 2017.

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

The backdrop to today's meeting was stable M2 growth of 6.2% y/y and monetary base growth of -0.2% y/y. In addition, the foreign exchange value of the U.S. dollar has risen 15.5% during the past year.

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

Do Forecasters Agree on a Taylor Rule? from the Federal Reserve Bank of Cleveland is available here.

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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