Economists have at least one more month to debate when the Federal Open Market Committee (FOMC) will vote to raise the Fed rate for the first time in nearly a decade.
FOMC committee members once again decided to hold the target range for the federal funds rate between zero to 0.25%--where it’s been since late 2008.
The announcement came at the end of FOMC’s two-day meeting to assess the state of the nation’s economy. Though economic activity continues to expand at a moderate pace since the committee’s July meeting, “inflation has continued to run below the committee's longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports,” it said in a statement. “Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term.”
While the committee sees risks for economic activity and the labor market as nearly balanced, it acknowledged it’s monitoring developments abroad. It also expects inflation to rise gradually toward 2% over the medium term as the labor market improves further and transitory effects of declines in energy and import prices dissipate.
“The committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium term.”
The committee further anticipates “that economic conditions may, for some time, warrant keeping the target federal funds rate below levels the committee views as normal in the longer run.”
One dissenter, Jeffrey Lacker, supported raising the rate a quarter point.
- Diana Mota, NACM associate editor