- Economic activity expanded moderately (no change)
- Labor market continues to strengthen (no change)
- Household spending continues to rise moderately (no change)
- Business fixed investment firmed (positive change)
- Inflation has increased and is moving closer to 2% (positive change)
- Near term risks to the economic outlook appear balanced (no change)
- All but 1 member voted to raising rates by 25bp (change)
- Bottom Line: there is a higher confidence that the 2% inflation target is in range and may overshoot (change) in “symmetry” to the undershooting around the target rate and will continue to closely monitor labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments (no change)
- Projections: according to the companion economic projections released, federal funds rate are projected to be at 1.4% by year end (i.e. 2 more rate hikes this year), 2.1% by yearend 2018 (i.e. 3 rate hikes next year) and 3% by the year-end 2019 (i.e. 3 to 4 more rate hikes).
[Using the FOMC February 1, 2017, Press Release as the base document, the March 15, 2017, Press Release changes are highlighted in the form of deletions (strike through) or insertions (in bold).]
Information received since the Federal Open Market Committee met in December February indicates that the labor market has continued to strengthen and that economic activity has continued to expand at a moderate pace. Job gains remained solid, and the unemployment rate stayed near its was little changed in recent low months. Household spending has continued to rise moderately while business fixed investment has remained soft. Measures of consumer and business sentiment appears to have improved of late firmed somewhat. Inflation has increased in recent quarters but is still below, moving close to the Committee’s 2 percent longer-run objective; excluding energy and food process, inflation was little changed and continued to run somewhat below 2 percent. Market-based measures of inflation compensation remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will rise to stabilize around 2 percent over the medium term. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments.
In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1/2 to 3/4 to 1 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.
In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from 2 percent, tThe Committee will carefully monitor actual and expected progress toward inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.
The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.
Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Jerome H. Powell; and Daniel K. Tarullo. Voting against the action was Neel Kashkari, who preferred at this meeting to maintain the existing target range for the federal funds rate.