FOMC Meeting: Key Takeaways

Wells Fargo Investment Institute shares its key takeaways from the Federal Reserve's decision to leave interest rates unchanged.

FOMC Meeting: Key Takeaways

November FOMC Meeting | November 1, 2017

Policy Announcement

The Federal Open Market Committee (FOMC) decided to maintain the current range for the federal funds target rate at 1.00 to 1.25 percent today. The FOMC reiterated that it expects economic conditions to evolve in a manner that will warrant gradual increases in the federal funds rate. The Federal Reserve (Fed) will continue reducing Treasury-security purchases by $6 billion per month and mortgage-backed-security purchases by $4 billion per month.

Topic Details
Stated Reasons The labor market has continued to strengthen, and economic activity has been rising at a solid rate, despite hurricane-related disruptions.

Job gains have been solid, there has been a pickup in household spending, and business investment has continued to expand.

On a 12-month basis, inflation (excluding food and energy prices) has declined and is running below the Fed’s long-term target of 2 percent.

Looking Forward The Fed believes that hurricane-related disruptions will continue to affect U.S. economic activity in the near term, but these disruptions are unlikely to materially alter the course of the economy over the medium term.

The FOMC continues to expect that the U.S. economy will expand at a moderate pace and that labor-market conditions will strengthen somewhat further.

The committee expects inflation to remain somewhat below 2 percent in the near term, but believes that it will approach this target over the medium term.

Near-term risks to the economic outlook appear roughly balanced.

What Else? The Fed continued to describe the path of future rate hikes as “gradual”.

The Fed will continue reducing the size of its balance sheet. This reduction will be $10 billion per month. We would expect the Fed to increase this amount by $10 billion in January if conditions warrant.

The vote was unanimous to keep the fed funds rate target range the same.

Market expectations of future rate-hike probabilities for December were slightly higher after the Fed’s announcement.

The FOMC decision today had a relatively minor impact on the markets.

Upcoming Meeting Schedule December 13 *| January 31 | March 21 * | May 2

* Indicates press conference occurring as well.

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