The Federal Open Market Committee held rates at 0.75% to 1%, with no dissents, while offering no clues as to what the June meeting holds.
The post-meeting statement notes continued labor market strength despite slower economic activity. While the fundamentals were “solid,” household spending grew modestly.
Inflation remained below, but close, to the Fed’s 2% target, the statement noted. “Excluding energy and food, consumer prices declined in March and inflation continued to run somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.”
The Fed called the slow first-quarter growth “transitory” and expects moderate growth going forward.
“Near-term risks to the economic outlook appear roughly balanced,” the statement said.
As for “the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation,” according to the statement. It expects the economy will warrant gradual rate hikes, with the federal funds rate remaining below the long-run expected levels, for some time.
The statement said the FOMC will continue “reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way.”