Thursday, July 28, 2016

The Fed's Outlook Brightens

After its meeting yesterday, the Federal Reserve opted to keep interest rates unchanged. But it did open the door to further rate rises in the coming months by adding in the following line to its statement: “Near-term risks to the economic outlook have diminished.”

That line suggests the Fed has increasing confidence in the improving labor market and the ability for inflation to move toward its 2 percent annual target. The addition follows a positive string of data, including a strong June jobs report, which helped ease concerns about the labor market after a dismal May report.

All in all, the Fed expects a brighter outlook for the U.S. economy. In addition to the job gains in June, household spending has been growing at a brisk clip, the Fed said. Yet the central bank also noted that business investment remained “soft.”

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