The Federal Reserve's decision-making body signaled once again Wednesday it's in no hurry to raise short-term interest rates, deciding not to remove the closely-watched “considerable time” language from its statement as many economists had expected.
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In its latest statement, the Federal Open Market Committee said it “can be patient in beginning to normalize the stance of monetary policy.” The statement later said the current near-zero interest rate policy would be appropriate for a “considerable time.”
The Fed also said in its statement it viewed that inflation “has continued to run below the Committee’s longer-run objective, partly reflecting declines in energy prices.”
While Fed watchers disagree on the precise timing of rate hikes, they largely predict the FOMC will begin raising rates sometime next year.
The central bank also updated its economic forecasts, projecting the unemployment rate will fall as low as 5.2% by the end of next year, slightly lower than in September, when the group predicted unemployment would only fall as low as 5.2% in 2015. The Fed also updated its inflation expectations, predicting a range between 1.0% and 1.6% in 2015. The September inflation forecast had been higher for 2015, with a projected range of 1.6% to 1.9%. The updated projections for Gross Domestic Product in 2015 did not change between September and December. The Fed still expects the economy will expand between 2.6% and 3.0% in 2015. The Fed expects the economy will have grown 2.3% to 2.4% by the end of this year, up from its September projection of about 2.1%. Richard Fisher of the Dallas Fed, Narayana Kocherlakota of the Minneapolis Fed and Charles Plosser of the Philadelphia Fed voted against the policy statement.