Fed Changes Tune Slightly On Lower Inflation, Stronger Labor Market

MarketWatch Pulse

The Federal Reserve has slightly changed its tune about the U.S. jobs outlook and inflation, saying underutilization in the labor market is "gradually 'diminishing' while the rate of price changes has slackened recently because of "lower energy prices." The Fed's new assessment of inflationary risks suggests the bank could hold of raising interest rates for the first time since 2006 even longer than Wall Street expects, though the Fed says it doesn't expect inflation to remain below 2% in the longer run. Most analysts have been predicting the bank would increase the key fed funds rate - now at zero - in mid-2015.

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