Federal Open Market Committee Will Not Increase Federal Funds Rate

Published May 04, 2016

Federal Funds: Federal Reserve LogoLast week, the Federal Open Market Committeethe group that sets the benchmark interest rate for bank lending —elected to hold steady and not increase federal funds rate. The current rate is set at between 0.25% and 0.5%, and will remain so, until at least the FOMC’s next meeting in June.


The FOMC noted that the labor market has “improved further” but economic activity growth has slowed.


“A range of recent indicators, including strong job gains, points to additional strengthening of the labor market,” the FOMC said in its official statement. “Inflation has continued to run below the Committee’s 2% longer-run objective, partly reflecting earlier declines in energy prices and falling prices of non-energy imports.”


The committee went on to note that it expects “economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”


Source: Housing Wire