Following a two-day meeting of the policy-making Federal Open Market Committee (FOMC), the Federal Reserve held current interest rates steady, but the central bank is likely to raise rates in the coming months (possibly in mid-June). Fed officials are not worried about the slow pace of growth during the first quarter of 2017. (U.S. GDP grew at an annualized rate of 0.7 percent.) The Fed said the slowdown was “likely to be transitory.”
“Inflation measured on a 12-month basis recently has been running close to the committee’s 2 percent longer-run objective,” the Fed said. Household spending rose “only modestly” but the fundamentals underpinning consumption growth “remained solid.”
Declines in the unemployment rate has been the primary driver behind the Fed’s recent rate increases. The unemployment rate fell to 4.5 percent in March, the lowest level since 2007. (The Labor Department will release the April jobs report on Friday.)
