The Latest FOMC Statement: Federal Funds Rate Left Unchanged

By at 13 December, 2019, 9:12 am

by Raymond J. Keating-

According to the FOMC statement released on December 11, the federal funds rate was left unchanged at a targeted range of 1‑1/2 to 1-3/4 percent.

The Fed described the labor market as “strong” and economic growth as “moderate.” Breaking growth down a bit further, the Fed summed up: “Although household spending has been rising at a strong pace, business fixed investment and exports remain weak.”

As for inflation, the Fed noted, “On a 12‑month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.”

So, with monetary policy having a real impact on price stability, this has been a good-news area with inflation, again, running low. In turn, the Fed’s contribution to economic growth comes through price stability.

As we look ahead, the primary risks to the economy from a policy standpoint remain uncertainty and increased costs via trade policies, and resulting stagnation or decline in business investment and trade, as well as policy uncertainties tied to the upcoming November 2020 elections.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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