Don’t stop the presses. The Federal Reserve’s latest statement from its Federal Open Market Committee on Wednesday offered no change to its near zero interest-rate policy.
Consumers, this means no big changes to interest rates on home, car and personal loans for the near future, other than typical short-term market factors.
That’s good news since average fixed rates on mortgages are currently in the 3.6-3.8 percent range.
The Fed’s FOMC, which sets policy, signaled after its March meeting that a rate hike in April was unlikely. The U.S. central bank has kept its key, short-term federal funds rate at its lowest level, “near zero,” since late 2008, the peak of the financial crisis.
Most market watchers now anticipate the Fed’s first move to raise interest rates could come in September. But with weak economic news just breaking, there’s more speculation that the long-anticipated rate hike won’t happen until the end of the year, or even in early 2016.
The U.S. economy barely registered any growth in the first three months of 2015 — an anemic 0.2 percent increase in gross domestic product (GDP), in large part because consumers are not spending their savings from cheaper gas, a strengthening dollar and a harsh winter.
But the Fed seems to see this as a hiccup in the overall economic recovery.
“Information received since the Federal Open Market Committee met in March suggests that economic growth slowed during the winter months, in part reflecting transitory factors,” the Fed says in its statement released Wednesday. “The pace of job gains moderated, and the unemployment rate remained steady. A range of labor market indicators suggests that underutilization of labor resources was little changed. Growth in household spending declined; households’ real incomes rose strongly, partly reflecting earlier declines in energy prices, and consumer sentiment remains high.”
“Transitory factors” is a key term here, referring to the temporary nature of the factors influencing the economy during the first few months of the year.
The Fed said it “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.”