Publications

- September 1, 2016: Vol. 28, Number 8

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Fed holds rates steady in July, shifting focus to September

by Reg Clodfelter

The Federal Open Markets Committee next meets Sept. 20–21, and investors are reading the tea leaves regarding potential action. At its July 26–27 meeting, the FOMC decided against raising the target range of the federal funds rate, noting monetary policy will remain accommodative to support improvement in the labor market and a return to 2 percent inflation.

In a statement following the July meeting, the committee indicated it did not expect these factors to change before its September meeting, stating inflation should remain low in the near term “in part because of earlier declines in energy prices,” but it is expected to rise to 2 percent in the medium term “as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further.”

While the statement was light on hard facts, the committee did state it expects economic conditions to warrant only gradual increases in the federal funds target rate going forwa

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