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May 03, 2017US MONETARY POLICY Today, May 3, 2017, the Federal Open Market Committee (FOMC) decided to maintain the target range for the federal funds rate at 0.75 to 1 per cent. The Committee is continuing with its existing policy of reinvesting principal payments from agency debt and mortgage-backed securities and anticipates doing so until the federal fund rate normalization is well underway. It was also noted that economic conditions are expected to evolve in a manner to only warrant gradual increases in the federal fund rate. The FOMC viewed the slowing in Q1 as transitory and that with gradual adjustment in monetary policy, economic activity will expand at a moderate pace and inflation will stabilize around 2 per cent over the medium term.
Since the previous Federal Open Market Committee meeting in March, the US labour market has continued to strengthen while economic activity slowed. Job gains have been solid and the unemployment rate has declined. Household spending growth was modest in Q1 but the fundamentals for growing consumption remain in place. Business fixed investment has firmed. Inflation has been close to the 2 percent longer-run objective while market-based measures of inflation compensation remain low.
US Federal Reserve
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