Federal Reserve policy-makers left the target range for the federal funds rate at 0 to .25% at the conclusion of their meeting yesterday.
“Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing,” the post-meeting statement said. “Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales.
“Although economic activity is likely to remain weak for a time, the committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability. The prices of energy and other commodities have risen of late.
“However, substantial resource slack is likely to dampen cost pressures, and the committee expects that inflation will remain subdued for some time. In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability.”
