Fed leaves rates unchanged May 6, 2016

Just as many predicted, the Federal Open Market Committee, the?group that sets the benchmark interest rate for bank lending, elected?this week to hold steady and not increase federal funds rate. ?According to a statement from the FOMC, labor market conditions?have ?improved further? since the FOMC?s last meeting, but ?growth in?economic activity appears to have slowed.?
The good news for housing, at least in the eyes of the FOMC members,?is that the housing sector ?has improved further? since the beginning?of the year. ??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 FOMC continued. ?Market-based
measures of inflation compensation remain low; survey-based measures?of longer-term inflation expectations are little changed, on balance, in?recent months.?
One interesting absence from the FOMC?s latest statement is a mention?of ?global risks? as a concern for the strength of the U.S. economy.?In its last statement in March, the FOMC said ?However, global economic?and financial developments continue to pose risks,? but there is no?mention of the global economy in the latest FOMC statement.
?In light of the current shortfall of inflation from 2%, the Committee will?carefully monitor actual and expected progress toward its inflation goal,??the FOMC stated.
?The Committee expects that 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,? the FOMC continued.??However, the actual path of the federal funds rate will depend on the?economic outlook as informed by incoming data.?