Newsroom
Fed maintains rates, cites inflation and labor market
The Federal Open Market Committee (FOMC) did not raise rates at the close of its two-day policy-setting meeting Wednesday, as was expected, citing the strong labor market and inflation moving close to 2 percent in its decision.
"Inflation has firmed since the committee's last meeting," said NAFCU Research Assistant Yun Cohen. "The personal consumption expenditures (PCE) index rose to 2 percent in March, hitting the Fed's target for the first time in a year as the outsized decline in cell phone service prices last March dropped out of calculation. Core PCE inflation also picked up to 1.9 percent."
The committee raised the federal funds target rate to the current range of 1.5 to 1.75 percent – a level last seen in 2008 – at the end of its March meeting. The median rate forecast for 2018 released in March called for three hikes overall, but many committee participants expected four or more rate hikes this year.
The committee, in its release, noted that "[r]ecent data suggest that growth of household spending moderated from its strong fourth-quarter pace, while business fixed investment continued to grow strongly." On inflation, it added that "[m]arket-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance."
The FOMC expects that with further policy adjustments the "economic activity will expand at a moderate pace in the medium term and labor market conditions will remain strong." It will continue to monitor labor market conditions and inflation pressures as it considers future rate hikes.
Cohen, in a NAFCU Macro Data Flash report, said the FOMC's statement sets the stage for a June rate hike. "The statement also emphasized that the 2 percent inflation objective is 'symmetric,' suggesting that the central bank would allow for a small overshoot of their inflation target," Cohen added.
The FOMC will meet again June 12-13, which will also include economic projections and a statement from Fed Chair Jerome Powell.
Share This
Related Resources
Add to Calendar 2024-05-03 14:00:00 2024-05-03 14:00:00 Plan Sponsor Attitudes Toward Retirement Plan Management and Fiduciary Outsourcing About the Webinar In January 2024, Pentegra conducted a survey of retirement plan sponsors and their perspectives on retirement plan management and fiduciary outsourcing. The survey measured how sponsors are using fiduciary outsourcing to help better manage their retirement plans. It also captured their perspectives on what outsourcing does to help them better position their plans and drive improved retirement plan outcomes. Key Takeaways: What is the full scope of your responsibilities as a plan sponsor? What is fiduciary outsourcing and how does it work? How does fiduciary outsourcing help reduce workloads and minimize risk? How can a credit union best position its plan to drive improved outcomes? Register Here Web NAFCU digital@nafcu.org America/New_York public
Plan Sponsor Attitudes Toward Retirement Plan Management and Fiduciary Outsourcing
preferred partner
Pentegra
Webinar
Turning Lemons into Lemonade: Capitalizing in a Post-Banking Crisis Era
Strategy
preferred partner
Allied Solutions
Blog Post
Ensuring Safety and Soundness with AI
Management, Consumer Lending, FinTech
preferred partner
Upstart
Blog Post
Add to Calendar 2024-05-02 14:00:00 2024-05-02 14:00:00 Mastering Resilience in Incident Response Plans About the Webinar An Incident Response (IR) plan is crucial for guiding credit unions through major incidents efficiently and effectively. However, many IR plans lack resilience, making them less adaptable to the evolving threat landscape. Join us for our webinar Mastering Resilience in Incident Response Plans where DefenseStorm cyber experts Elizabeth Houser and James Bruhl will delve into the importance of resiliency within cybersecurity IR plans. Don’t miss out on the opportunity to learn how to: Ensure IR plan accessibility so that all team members with assigned roles are prepared for effective incident response. Conduct efficient and regular reviews to ensure roles and responsibilities are current, tools are relevant, and compliance requirements are met. Implement and utilize tabletops to regularly test the effectiveness of your IR plan. Enhance preparedness, efficiency, and confidence among responders. View On-Demand Web NAFCU digital@nafcu.org America/New_York public
Mastering Resilience in Incident Response Plans
preferred partner
DefenseStorm
Webinar
Get daily updates.
Subscribe to NAFCU today.