Information received since the Federal Open Market Committee met in April
suggests that economic activity has been
expanding moderately after having changed little during the first quarter. The
pace of job gains picked up while the unemployment rate remained
steady. On balance, a range of labor market indicators suggests that
underutilization of labor resources diminished somewhat. Growth in household spending has been moderate
and the housing sector has shown some
improvement; however, business fixed investment and net
exports stayed soft. Inflation continued
to run below the Committee's longer-run objective, partly
reflecting earlier declines in energy prices and decreasing prices of non-energy imports ; energy
prices appear to have stabilized. Market-based measures of inflation
compensation remain low; survey-based measures
of longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with
policy accommodation, economic activity will expand at a moderate
pace , with labor market indicators continuing to
move toward levels the Committee judges consistent with its dual mandate. The
Committee continues to see the risks to the outlook for economic activity and
the labor market as nearly balanced. Inflation is anticipated to remain near its
recent low level in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as
the labor market
improves further and the transitory effects of earlier declines in energy and import
prices dissipate .
The Committee continues to monitor inflation developments closely.
how long to
maintain this target
range, the Committee will assess progress--both
realized and expected --toward 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
anticipates that it will be appropriate to raise the target range for the
federal funds rate when it has seen further improvement in the labor market and
is reasonably confident that inflation will move back to its 2 percent
objective over the medium term.
The Committee is maintaining 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
policy, by keeping the Committee's holdings of longer-term securities at
sizable levels, should help maintain accommodative financial conditions.
Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard;
Charles L. Evans;
Stanley Fischer; Jeffrey M. Lacker; Dennis P. Lockhart; Jerome H. Powell; Daniel
K. Tarullo ;
and John C. Williams.