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| AFTER THE STORMS: FED REMAINS STAGNANT By Joey Pizzolato The Federal Open Market Committee (FOMC) recently held its sixth meeting to discuss monetary policy and the potential of an interest rate hike, which is expected to happen at least once before the close of 2017. According to the Federal Reserve's latest press release, economic conditions remain similar to when the FOMC last met in July: the labor market continues to strengthen, job growth has shown a small but measurable increase, and unemployment has remained relatively the same. Household spending has increased slightly, and business investment over a the last couple quarters has shown an increase. However, inflation continues to remain below 2 percent, despite increases in food and energy prices, which the Fed excludes from its calculations. The Fed notes that it remains committed to its current policy of maintaining an inflation rate of 2 percent and low unemployment numbers. The recent hurricanes that have made landfall along the continental United States, as well as its territories, pose a significant concern to the FOMC. "Hurricanes Harvey, Irma, and Maria have devastated many communities, inflicting severe hardship. Storm-related disruptions and rebuilding will affect economic activity in the near term, but past experience suggests that the storms are unlikely to materially alter the course of the national economy over the medium term. Consequently, the Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further. Higher prices for gasoline and some other items in the aftermath of the hurricanes will likely boost inflation temporarily; apart from that effect, inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term." The committee notes that inflation rates will continue to be monitored closely, but they will not be increasing interest rates as of this time. They do say, however, that they plan to initiate the balance sheet normalization program that they announced in June of this year. The FOMC has two more meetings scheduled before the end of the year. For the full press release, follow this link. Joey Pizzolato is the Online Editor of DS News and MReport. He is a graduate of Spalding University, where he holds a holds an MFA in Writing as well as DePaul University, where he received a B.A. in English. His fiction and nonfiction have been published in a variety of print and online journals and magazines. Original Source: DS News |
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