The Fed Lowers Economic Outlook, Affecting First Rate Hike

Posted by Laine Smith on 5/15/15 8:00 AM

Topics: Economy

The Federal Reserve lowered its economic outlook at the end of April after lower-than-expected economic gains. Though the U.S. economy stumbled during the first quarter of 2015, the Federal Reserve said they expect growth to rebound in the coming months.

Economic_Update

 

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

The U.S. economy's weak data from the first quarter included a gross domestic product growth of only 0.2 percent, which is attributed to harsh winter weather. The first two months of 2015 showed strong job growth, followed by a small increase in March. The Fed stated labor market conditions had not improved over the last month but initial estimates of April job growth were released last week.

In their post-meeting statement, the Fed said the committee "reaffirmed its view that the current 0 to 0.25 percent target range for federal funds remains appropriate," and the timing of any increase will occur when the committee sees further improvement in the labor market and confidence that the inflation rate will move back to its objective. Currently, price inflation remains well-below the Fed's "healthy" rate of a 2 percent annual pace.

The Fed said they will continue to take a "balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent" though economic conditions may cause the committee to keep the target federal funds rate below levels they view as normal for some time.

To receive a weekly summary of happenings in the economy, sign up for our free Weekly Economic Updates.

Subscribe to Weekly Economic Updates

Subscribe to Email Updates