Thursday, November 2, 2017

The Fed Speaks

As expected, the Federal Reserve announced yesterday it was leaving interest rates unchanged, in a range of 1 percent to 1.25 percent. However, 12 out of 16 Fed officials have penciled in a December rate hike in the so-called dot-plot, a projection of where Fed members see rates in the future.

The Fed also said that economic activity was on the rise, and that recent hurricanes shouldn't have long-term effects. "Although the hurricanes caused a drop in payroll employment in September, the unemployment rate declined further," the Federal Open Market Committee said. "Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters."

The Fed noted that inflation remained soft and below its 2 percent objective, despite the fact that gas prices rose after the hurricanes. Its preferred inflation gauge, personal consumption expenditures, excludes food and energy prices, and that figure rose just 1.3 percent in September.

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