Slowdown makes Fed question lifting easy-money policies

WASHINGTON – A first-quarter economic slowdown has cast a question mark over when the Federal Reserve could lift its easy-money policies that have been in place since the start of the Great Recession.
The nation’s central bank Federal Open Market Committee previously signaled a possible midyear central interest rate increase, which has remained near zero since the financial crisis in 2008, but following a two-day policy meeting last week, the Fed released a statement noting that a harsh winter and tough labor market caused an economic slowdown making it unlikely for any imminent increase.
“Economic growth slowed during the winter months, in part reflecting transitory factors,” the Fed said in a statement. “The pace of job gains moderated and the unemployment rate steady. A range of labor market indicators suggests that underutilization of labor resources was little changed.”
Inflation continues to run below where the Fed would like to see it at 2 percent, which plays a factor into its decision surrounding rate increases.
“The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has see further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term,” according to the Fed.
The Fed said the current policies should help maintain “accommodative financial conditions,” and assured the public that when it does lift the current policies it would do so in a “balanced approach.”
“The Committee anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run,” according to the statement.

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