Fed Likely to Raise Rates in September or October

July 30th, 2015

On July 29, 2015, the Federal Reserve published the most recent Federal Open Market Committee (FOMC) policy statement.  Following the FOMC’s two day policy meeting, the committee decided to maintain the current target rate for the federal funds rate at 0 to ¼ percent.  The statement acknowledges improvement over the summer in the labor market, housing sector and household spending.  The FOMC said that it expects inflation to begin catching up with the two percent target soon.

Accordingly, the FOMC is expected to raise rates at one of the three remaining meetings this year, either in September, October or December.  Rhetoric suggests, however, that the rate hike could come as early as September. The committee stated, “The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.”

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