Information received since the Federal Open Market Committee met in March suggests that economic activity has been expanding only at a modest pace in the first quarter having hit a soft patch which may be transitory. A range of recent indicators, including job gains, points to additional strengthening of the labor market. Inflation less energy and food picked up in recent months. The Committee continues to monitor various measures of inflation closely.
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.
Against this backdrop, the Committee decided to maintain the target for the federal funds rate at 1/2 percent. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and economic growth while guiding inflation to the 2 percent medium term target.
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. 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 has ended 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. To ensure that the money supply is put to its most productive uses, the Committee has stopped paying interest on excess reserves.
Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Esther L. George; Loretta J. Mester; Jerome H. Powell; Eric Rosengren; and Daniel K. Tarullo.