Washington, D.C. — Michael Madowitz, Economist at the Center for American Progress, released the following statement today after the Federal Reserve announced its intent to leave key interest rates unchanged. The announcement arrives after the Federal Open Market Committee, or FOMC, met yesterday and today in Washington.
It is encouraging that the FOMC has chosen to remain data dependent in setting interest rate policy: Since it last raised rates in December, statements from Fed officials have grown more doveish, and the Fed has not tightened monetary policy this year. These decisions have helped the U.S. economy add more than 1.2 million jobs through August 2016, even as inflation and inflation expectations have remained well under control. Most notably, the unemployment rate today is 4.9 percent, exactly where it stood in January. Prudent patience from the Fed this year appears to be generating long-term gains for the economy.
It is good to see monetary policymakers upholding both parts of the dual mandate. Moreover, the growing consensus at the Fed appears to be that the correct response to uncertainty about the economy’s ability to grow is to wait for data suggesting the nation is nearing full employment before using monetary policy to lower inflation expectations.
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