WASHINGTON, D.C. — The Federal Reserve voted unanimously to maintain the target range for the federal funds rate at 1.5% and 1.75% on Wednesday, but hinted at a possible rate hike in June with inflation creeping closer to its 2% goal.
The Fed noted that since the Federal Open Market Committee met in March, when it approved its sixth hike since December 2015, the labor market has continued to strengthen and economic activity has been rising at a moderate pace.
“The committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time now, below levels that are expected to prevail in the longer run,” read the FOMC’s statement. “However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”
On Monday, the government reported that inflation, as measured by the Fed’s preferred personal consumption expenditures price index, increased by 2% on a year-over-year basis in March. That was the biggest gain since February 2017 and followed a 1.7% rise in February.
As for the job market, economists expected April to return to normal after two months of weak growth. In February, domestic employers added 100,000 more nonfarm payroll jobs than expected, but the 100,000 jobs added in March was less than expected. “Normal” is a gain of roughly 180,000 jobs, which has been the monthly average for more than two years.