Economy Watch: No Change for Interest Rates. Yet.
- Mar 17, 2016
As expected, the Federal Open Market Committee decided not to adjust interest rates during its latest meeting this week. The central bank cited uneven growth. “Economic activity has been expanding at a moderate pace despite the global economic and financial developments of recent months,” it noted. “Household spending has been increasing at a moderate rate, and the housing sector has improved further; however, business fixed investment and net exports have been soft.”
Moreover, global economic and financial developments continue to pose risks, the committee said. Inflation is expected to remain low in the near term, in part because of declines in energy prices, but will rise to 2 percent as the temporary effects of declines in energy and import prices dissipate and the labor market strengthens further—so the Fed posited.
All in all, the economy is fair-to-middling, and so interest rates will stay low, though the central bank might still raise rates later this year. Even so, money’s still cheap for real estate deals.
Also reported on Wednesday—and of some interest to policymakers at the central bank in their deliberations—the Bureau of Labor Statistics said that the Consumer Price Index for All Urban Consumers declined 0.2 percent in February. Over the last 12 months, the all items index increased 1 percent before seasonal adjustment.
The price of energy continued to drop. That was the major cause of the decline in the all items index, more than offsetting increases for food and for all items less food and energy. The price of gasoline fell sharply, declining 13 percent, and the cost of fuel oil and electricity also decreased, though natural gas rose.