ts policy statement released Wednesday, the Fed said the case has strengthened for a rate hike this year.
But three members of the Federal Open Markets Committee, which makes monetary policy decisions, thought the Fed should have gone ahead with a rate hike at its two-day meeting that just concluded.
The Fed s statement paved the way for it to raise the fed funds rate, likely by 25 basis points from the current range of 0.25% to 0.50%, later this year. The Fed hiked last December for the first time since before the Great Recession.
The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives, the statement said.
Those objectives are twofold. On the labor market, the committee noted that job gains have been strong in recent months although the unemployment rate has held steady. And on inflation, which is still shy of its 2% target, the Fed said it expects prices to remain low because of the drop in energy costs but to rise in the medium term.
So markets are already counting down to the Fed s next big meeting in three months, expecting that it will pass on changing rates at its November meeting, which has no scheduled press conference.
Fed fund futures, which reflect traders bets for future interest rates, showed a 61% probability of a rate hike in December, up from 59% ahead of the Fed s statement.
The statement was accompanied by new projections for interest rates, economic growth, and inflation.
The dot plot, which reflects where members think rates should be over the next few years, was more dovish. The median FOMC member predicts rates between 0.50% and 0.75% at the end of this year, suggesting only one more hike in 2016. In the longer term, Fed members see rates around 3%.
Samantha Lee/Business Insider
And the Fed now expects 2016 gross domestic product to grow by around 1.7% to 1.9% in 2016, compared with its previous outlook of 1.9% to 2.0%.
It now projects the unemployment rate to be around 4.7% to 4.9% this year, above the prior forecast of 4.6% to 4.8%.
It kept its expectations for core PCE inflation unchanged, at 1.6% to 1.8% for the year.
Around 2:30 p.m. ET, Fed chair Janet Yellen will hold her press conference and provide some color on the Fed s decision.
Here s the full statement:
Information received since the Federal Open Market Committee met in July indicates that the labor market has continued to strengthen and growth of economic activity has picked u上海夜网