UPDATE: 2:15 p.m. EDT — The Federal Reserve opted to keep interest rates on hold Wednesday. In a statement the Fed noted that “pace of improvement in the labor market has slowed,” reflecting a dispiriting jobs report from May.
Fed officials also notched down their projections for economic growth in 2016 and 2017, while reducing their long-term benchmark interest rate expectations from 3.3 percent to 3 percent.
The rate-setting committee of the U.S. Federal Reserve will conclude its two-day conference Wednesday with a policy announcement and live press conference outlining the state of employment and inflation.
Economists are virtually unanimous in predicting no change in the Fed’s current interest rate, which is just a couple notches above 0 percent. Despite weeks of indications from Fed officials that a hike could be in the works this summer, investor expectations for a rate increase tanked after May’s dismal jobs report.
But the release Wednesday should provide insight into Fed policymakers’ expectations for the months and years to come. In particular, the Fed’s economic policy projections will show whether they are adjusting to what has become a new reality: near-full employment without the price inflation and economic vitality that generally accompanies a full jobs market.
With inflation persistently falling short of the Fed’s 2 percent target, policymakers are left with a strategy “ill adapted to the realities of the moment,” former Treasury Secretary Lawrence Summers wrote in a Washington Post op-ed Tuesday. “The Fed, with its chronic hope and belief that conditions will soon permit interest rate increases, is misguided.”
That concern is likely to take center stage as Fed Chair Janet Yellen addresses the nation at 2:30 p.m. EDT. You can watch the live stream below or at the Federal Reserve website here.
The Fed’s economic summaries and projections can be accessed at 2 p.m. EDT at the link here.