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Federal Reserve Leaves Rates at a Quarter of a Percentage Point

Fed says pace of improvement in labor market has slowed, concerned with inflation

Janet Yellen
Janet Yellen / AP
June 15, 2016

The policy making arm of the Federal Reserve is leaving the federal funds rate at a quarter of a percentage point, unchanged from the rate decided upon at the last meeting in April, according to the Federal Open Market Committee’s statement.

In keeping with the Federal Reserve’s dual objectives of maximum employment and inflation reaching its 2 percent objective, the committee has decided to not raise the federal funds rate and keep it steady at a quarter of a percent.

The Fed is concerned that improvement in the labor market has slowed and that inflation has continued to run below its objective.

"Information received since the Federal Open Market Committee met in April indicates that the pace of improvement in the labor market has slowed while growth in economic activity appears to have picked up," the Fed’s statement read. "Although the unemployment rate has declined, job gains have diminished."

"Inflation has continued to run below the Committee’s 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports," the statement read. "Market-based measures of inflation compensation declined; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months."

The committee said it would continue to monitor labor market conditions, indicators of inflation pressures, and readings on financial and international developments when deciding the timing and size of future federal funds rate adjustments.

The committee will hold its next meeting on July 26 and 27, which will be the next opportunity the Fed has to raise rates.

Published under: Federal Reserve