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  1. Home
  2. ECONOMY
May 02, 2018 01:00 AM

Fed leaves federal funds rate unchanged at May meeting

Hazel Bradford
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    Bloomberg
    Federal Reserve Chairman Jerome Powell

    Members of the Federal Open Markets Committee decided Wednesday to keep the federal funds rate at a range of 1.5% to 1.75%.

    The committee raised it by 25 basis points at its March 21 meeting, citing a strengthening economy and expectations of upward movement on inflation.

    FOMC members noted in a statement that since their March meeting, the labor market has continued to strengthen, economic activity has been rising at a moderate rate and job gains have been strong in recent months. Household spending "moderated" from a strong fourth-quarter pace, but business capital investments continued to grow strongly.

    There was little change on closely watched inflation indicators, aside from them moving closer to 2% on a 12-month basis. Committee members did not release their own projections for future rate hikes at this meeting.

    Fed watchers are expecting a rate hike at the committee's June 12-13 meeting, which will include a news conference.

    Minutes from the March meeting show that a majority of participants also viewed uncertainty over U.S. trade policies as downside risk for the U.S. economy, the minutes said.

    James McCann, senior global economist at Aberdeen Standard Investments, said in a statement that a deeper trade conflict "remains another risk, although we have to keep in mind that this would affect both the supply and demand side of the economy, complicating the policy response."

    The Fed "is looking through building trade tensions and a small slowdown in Q1 growth and remains confident about the health of the U.S. economy," said Mr. McCann, who sees another seven rate hikes between now and end of 2019 as likely, "unless there is a sudden deterioration in the economic outlook."

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