The Fed noted the slowing US economy – The Tribune.fr

The US central bank, decided, as expected, do not touch interest rates. The “fed funds”, ie central bank money that the Fed lends to central banks, will always carry a rate of between 0 and 0.25%.

Most importantly, the policy committee Money from the central bank raised the weakness of the US economy this winter, as evidenced by the publication of GDP for the first quarter (+ 0.2% annual rate, is almost zero from one quarter to another). It notes the continued weakness in the use of factors of production, employment rising at a rate that remains moderate.

Because of an economic situation still far from full employment, most economists believe that the Fed will not give up until September its zero interest rate policy.

A confidence in the growth

However, the monetary policy committee of the central bank remains confident in the US economy.
“Although growth in production and employment levels have slowed in the first quarter, the Committee continues to anticipate that the appropriate monetary easing measures, economic activity will accelerate at a moderate pace, with the conditions of the labor market continue heading to the levels the Committee considers consistent with its dual mandate “(controlling inflation and full employment), the statement of Fed. “The Committee continues to believe that the risks surrounding the outlook for economic activity and the labor market are almost balanced.”

No rate hike before September

When will the rise in interest rates announced in principle for this year?
“The Committee feels it would be appropriate to raise the target for the federal funds rate when he has found new improvements the labor market and will be reasonably confident that inflation returns to its 2% target in the medium term. ” the statement said. Most economists do not expect such a decision before September.
“When the Committee decides to end its accommodative policy, he will observe a balanced approach consistent with its long-term goals of maximum employment and inflation of 2%. ” In other words, the rise in interest rates will be very gradual.

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