The FOMC voted to keep rates unchanged yet again but kept alive a possible rate hike later this year. The assessment of the economy remains little changed from the July meeting with economic pace described as moderate and a little less strength emphasized on the labor market. Household spending is once again described as strong and business investment is again described as soft. The inflation assessment is unchanged, as it is described as running below target. The difference in the meeting this month is the support among members for an immediate rate hike, as two more members joined Kansas City’s member and voted to raise hikes making the vote to keep rates unchanged 3 to 7. The statement put out by the Fed now includes the phrase that economic risks “appear roughly balanced” a phrase the FOMC inserted before raising rates last December. The meeting also includes quarterly projections which hint at an approaching rate hike as 10 of 17 FOMC forecasters see one rate hike coming this year.
Fed Chair Press Conference
Janet Yellen, Fed Chair, stated in her post meeting press conference, that though she is confident in the strength of the labor market citing gains in the participation rate, though she underscored the need for further labor market improvements especially the involvement of the long-term unemployed. She stated that a rate hike now could expose the labor market to an “unnecessary risk.” The current lack of inflation, she stated, is another reason behind not moving rates at the past meeting. “It’s important we get back to 2 percent,” she said referring to the Fed’s inflation target rate. She did state clearly that the November meeting could result in a rate hike depending on incoming economic data.