The Federal Open Market Committee today held its key policy rate, the federal-funds target rate, unchanged at zero to 0.25%, and reiterated that economic conditions warrant “exceptionally low interest rates “for an extended period.
Financial conditions “have become less supportive of economic growth on balance, largely reflecting developments abroad,” the FOMC said in language added to the policy statement from the April meeting.
For the fourth straight meeting, Federal Reserve Bank of Kansas City president Thomas Hoenig was the lone dissenter. He believed that continuing the language, “exceptionally low” interest rates “for an extended period,” was longer warranted because it “could lead to a build-up of future imbalances” and limit the Fed’s flexibility to raise rates going forward.
The FOMC last changed the federal funds rate in December 2008, when the rate was dropped to the current zero to 0.25% range. The FOMC last raised rates in June 2006.
