Full Statement FOMC Meeting Apr 26-27, 2016
Release Date: April 27, 2016
For release at 2:00 p.m. EDT
Information
received since the Federal Open Market Committee met in March indicates
that labor market conditions have improved further even as growth in
economic activity appears to have slowed. Growth in household spending
has moderated, although households' real income has risen at a solid
rate and consumer sentiment remains high. Since the beginning of the
year, the housing sector has improved further but business fixed
investment and net exports have been soft. A range of recent indicators,
including strong job gains, points to additional strengthening of the
labor market. Inflation has continued to run below the Committee's 2
percent longer-run objective, partly reflecting earlier declines in
energy prices and falling prices of non-energy imports. Market-based
measures of inflation compensation remain low; survey-based measures of
longer-term inflation expectations are little changed, on balance, in
recent months.
Consistent with its statutory mandate, the
Committee seeks to foster maximum employment and price stability. The
Committee currently expects that, with gradual adjustments in the stance
of monetary policy, economic activity will expand at a moderate pace
and labor market indicators will continue to strengthen. Inflation is
expected to remain low in the near term, in part because of earlier
declines in energy prices, but to rise to 2 percent over the medium term
as the transitory effects of declines in energy and import prices
dissipate and the labor market strengthens further. The Committee
continues to closely monitor inflation indicators and global economic
and financial developments.
Against this backdrop, the Committee
decided to maintain the target range for the federal funds rate at 1/4
to 1/2 percent. The stance of monetary policy remains accommodative,
thereby supporting further improvement in labor market conditions and a
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, the Committee will carefully
monitor actual and expected progress toward its 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; James Bullard; Stanley Fischer;
Loretta J. Mester; Jerome H. Powell; Eric Rosengren; and Daniel K.
Tarullo. Voting against the action was Esther L. George, who preferred
at this meeting to raise the target range for the federal funds rate to
1/2 to 3/4 percent.