Members of the Federal Open Market Committee reaffirmed their view Wednesday that the current 0.25% to 0.5% target range for the federal funds rate remains appropriate.
Despite further progress, certain economic conditions warranting an increase still have to be met, said a statement released at the end of the two-day meeting. Concerns over global pressures also remain.
“Economic activity has been expanding at a moderate pace despite the global economic and financial developments of recent months. Household spending has been increasing at a moderate rate, and the housing sector has improved further; however, business fixed investment and net exports have been soft,” according to the statement.
And although, “inflation picked up in recent months,” it is still below the committees’ 2% longer-run objective, the committee noted.
The committee did not specify at what point it will raise the target range, but it did lower its rate hike predictions to two increases this year down from four. One member voted to raise the target range to 0.5% to 0.75% at this week’s meeting.
The lack of a risk assessment in Wednesday’s report suggests that an April rate hike is off the table, said John C. Bailer, senior managing director with The Boston Co. Asset Management, in a telephone interview. June is a “coin flip,” Mr. Bailer said.
Regarding the committee’s assessments, Mr. Bailer said the Fed might be underestimating the strength of the U.S. economy, and that he anticipates its growth will better than expected.