The Federal Open Market Committee at the end of January calmly resisted the urge to set into play an increase in key interest rates, saying for now that holding the federal funds rate at 0-1/4 percent is “appropriate.” The FOMC statement described U.S. economic expansion since December at “a solid pace”–optimistic language not seen in previous statements. “Labor market conditions have improved further, with strong job gains and a lower unemployment rate,” the statement said. “On balance, a range of labor market indicators suggests that underutilization of labor resources continues to diminish. Household spending is rising moderately; recent declines in energy prices have boosted household purchasing power. Business fixed investment is advancing, while the recovery in the housing sector remains slow. Inflation has declined further below the Committee’s longer-run objective, largely reflecting declines in energy prices. Market-based measures of inflation compensation have declined substantially in recent months; survey-based measures of longer-term inflation expectations have remained stable.” But the FOMC made no move to put a rate increase in place, saying in determining how long to maintain the target range of 0-1/4 percent, it would continue to assess progress toward its objectives of maximum employment and two percent inflation. Source: MBA
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