The Federal Reserve has kept interest rates unchanged.

• May 2, 2018
• realestate
• Announcements, Business & Markets, Real Estate, Real Estate Finance, Your Real Estate Life

On Wednesday, the U.S. central bank released its latest policy statement, maintaining a target benchmark interest rate range of 1.5%-1.75%.
Wall Street had expected the Fed would make no changes to its interest rate policy on Wednesday after raising rates in March for the sixth time since the financial crisis.

Wednesday’s announcement was not accompanied by a press conference with Fed chair Jay Powell nor were updated economic forecasts from the Fed released.

In its statement, the Fed said, “Information received since the Federal Open Market Committee met in March indicates that the labor market has continued to strengthen and that economic activity has been rising at a moderate rate. Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low.”

The biggest development in the statement, however, was a tweak in the Fed’s language with respect to inflation.

“On a 12-month basis, both overall inflation and inflation for items other than food and energy have moved close to 2 percent,” the Fed’s statement said.
The Fed has a goal of 2% price inflation.

In March, the Fed said that inflation excluding food and energy had “continued to run below 2 percent” on a 12-month basis.

And so in making this change, Fed officials are acknowledging that inflation is getting closer to its target. In March, personal consumption expenditures (PCE) rose 1.9% over the prior year when stripping out food and energy. Core PCE is the Fed’s preferred measure of inflation.

A sustained turn in inflation above this 2% target, or even a sustained period of inflation hitting this target, could change the Fed’s policy outlook in the coming years.