Federal Reserve policymakers today left the federal funds target rate range unchanged at zero to 25 basis points.
“The committee … continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period,” said a statement by the Federal Open Market Committee, which sets the rate.
The committee said economic activity appeared to be strengthening and that the labor market was stabilizing. “Household spending is expanding at a moderate rate but remains constrained by high unemployment, modest income growth, lower housing wealth and tight credit,” the committee added. “Business spending on equipment and software has risen significantly. However, investment in non-residential structures is declining, housing starts have been flat at a depressed level, and employers remain reluctant to add to payrolls.”
“There was nothing here to surprise the markets,” Dan Dektar, chief investment officer at Smith Breeden Associates, said in an interview. “The FOMC sees better, but not robust, economic activity, and consequently is ready to end the use of unconventional policy tools on schedule. They will keep conventional monetary policy easy while monitoring the fragile recovery.”