- Brian Bethune, an economics professor at Tufts University
The Fed remains on track to hike interest rates later this year, with odds rising that the decision will come as soon as its next monetary policy meeting in September, as the US economy continues to perform in line with expectations. The decision to keep rates near at all-time low for at least a few more weeks was unanimous, supported by all ten voting members of the FOMC. Nevertheless, a number of those policy makers have said in recent months that they do not think the Fed should wait much longer.
Following FOMC two-day meeting, Fed officials said the world's number one economy managed to overcome a first-quarter slowdown and was growing moderately despite a weakness in the energy sector and headwinds from abroad. Thus, the central bank upgraded its view of the economy and the labour market, but remained uncertain about the course of inflation, which has been weaker than the Fed would like. Describing the job market, the Fed for the first time pointed to "solid" job gains and declining unemployment. The unemployment rate has slid to a seven-year low of 5.3%. The Fed said it only needed to see "some" improvement in the labour market. Besides the additional amelioration on the labour front, the central bank said it also needed to be more confident that low inflation will rise to the 2% medium-term target. The Fed's policy committee next meets Sept. 16 and 17.
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