Tag Archives: Federal Open Market Committee

The Federal Open Market Committee will convene for the first time in 2016 and the first time since December's historic rate hike. Will they choose to raise the federal funds target rate again?

The Federal Reserve made the long-awaited, much-anticipated announcement on Wednesday afternoon that federal funds target rate will increase by 25 basis points from its near-zero level where it has been since 2006.

The Federal Open Market Committee (FOMC) will convene next week for the last time this year and is expected to sweep the industry with a change to the federal funds rate, something that has not been done since June 2006. ...

A statement from the FOMC showed that household spending and business fixed investment rose at solid rates in recent months, while the housing market continued to improve.

On the side of the argument for exercising patience, Williams said there are two main concerns: One, the constraint of the “zero lower bound,” which is to say rates can’t go any lower than zero and there will not be room to lower the rates if there is another economic downturn or if inflation drops further; and two, the inflation has been “stubbornly” below the Fed’s target rate of 2 percent for almost three and a half years.

On the downside, government officials saw net exports fall soft, job gains slow, and the unemployment rate held steady. In addition, inflation remains under the Committee's objective of 2 percent, reflecting falling energy prices and prices of non-energy imports.

"In determining how long to maintain this target range, the Committee will assess progress—both realized and expected—toward its objectives of maximum employment and 2 percent inflation," the Fed said in a statement.

FOMC chair Janet Yellen revealed at a mid-July House Financial Services Committee hearing that rates would be raised upon improving economic conditions at no particular time.

The Committee also determined that labor market indicators found that underutilization of labor resources have diminished slightly, and growth in household spending has been moderate, while the housing sector showed some improvement. However, business fixed investment and net export remained soft.

In a speech in Florida on Thursday, President and CEO of the Federal Reserve Bank of Atlanta Dennis Lockhart discussed what the country's current economic conditions suggest would be the appropriate path for monetary policy to take.