“To support continued progress toward maximum employment and price stability, the Committee on Friday reaffirmed its view that the current 0 to 1/4 <g data-gr-id="42">per cent</g> target range for the federal funds rate remains appropriate,” the Federal Reserve said in a statement after the meeting of its committee.
In determining how long to maintain this target range, the Committee will assess progress -- both realised and expected -- towards its objectives of maximum employment and two per cent inflation, it said.
The Federal Reserve said it anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labour market and is reasonably confident that inflation will move back to its two per cent objective over the medium term.
Later at a news conference, Federal Reserve Chairwoman Janet L Yellen said the committee continues to anticipate that the first increase in the federal funds rate will be appropriate when it has seen some further improvement in the labour market and is reasonably confident that inflation will move back to its two per cent objective over the medium term. “The inflation outlook has softened slightly. We’ve had some further developments, namely lower oil prices, and a further appreciation of the dollar, that have put some downward pressure in the near-term on inflation. Now, we fully expect those further effects like the earlier moves in the dollar and in oil prices to be transitory, but there is a little bit of downward pressure on inflation,” she said in response to a question.
“I want to emphasise that domestic developments have been strong. We see domestic demand growing at a solid pace, the labour market continuing to improve. Of course, we will watch incoming data <g data-gr-id="34">to confirm</g> our expectation that will continue. And we, of course, will watch global financial and economic developments,” she said in response to a question. “I can’t give you a recipe for exactly what we’re looking to see, but as we say, we want to see continued improvement in the labour market, and we would like to bolster our confidence that inflation will move back to two per cent.
And, of course, a further improvement in the labour market does serve that purpose. There could be other things we would see that could bolster that confidence, but further improvement in the labour market will serve to do that,” she noted.
Observing that there are many uncertainties in the global economy, she said: “We are asking ourselves how economic and financial developments in the global economy affect the risk to our outlook for our two goals and whether or not they create unbalanced risks that we want to wait to resolve to some extent.”