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Economy in Brief

FOMC Leaves Fed Funds Rate Unchanged; Adjusts Growth Expectation Downward
by Tom Moeller  September 21, 2016

At today's meeting of the Federal Open Market Committee, the fed funds rate was left unchanged in the range of 0.25%-0.50%, as expected.

The commentary in today's release was much the same as after the last meeting. Improvement in the labor market was highlighted, and although the unemployment remained steady, "job gains have been solid."

Consumer spending was viewed as strong, but business investment was soft. Price inflation was seen as running below the longer-term 2% objective, due to lower energy prices and lower prices for non-energy imports.

Updated projections for economic activity were released. This year's GDP growth forecast was reduced to 1.8% from 2.0% expected at the last meeting. Expected growth next year and in 2018 was left at 2.0%. Over the long term, 1.8% growth was expected rather than 2.0% projected in June. PCE price inflation was expected to be 1.3% this year versus 1.4% expected earlier. Projections for 2017 and for 2018 were unchanged at 1.9% and 2.0%, respectively. Core PCE price inflation forecasts were unchanged at 1.7% in 2016, 1.8% in 2017 and 2.0% in 2018. The unemployment rate was projected to decline to 4.5% by 2018, revised from 4.6%.

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

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

Current Last 2015 2014 2013 2012
Federal Funds Rate, % (Target) 0.25-0.50 0.25-0.50 0.13 0.09 0.11 0.14
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