U.S. Fed leaves open possible Dec rate hike

Federal-Reserve

Oct 29, 2015 – (LBO) – The U.S. Fed has indicated that a December rate hike is a possibility outlining how economic activity has been expanding at a moderate pace.

“In determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation,” a statement after a two-day policy meeting said.

After the announcement, the yield on the benchmark 10-year note ticked up to 2.09 percent, compared with 2.04 percent late on Tuesday.

The possibility of a December hike, the first in nearly a decade, increased to 46 percent from 35 percent seen previously, according to market data.

“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,” the Federal Open Market Committee said.

The FOMC said economic activity has been expanding at a moderate pace. Household spending and business fixed investment have been increasing at solid rates in recent months, and the housing sector has improved further; however, net exports have been soft, it said.

“The pace of job gains slowed and the unemployment rate held steady. Nonetheless, labor market indicators, on balance, show that underutilization of labor resources has diminished since early this year.”

Inflation has continued to run below the Committee’s longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports, the FOMC said.

According to its statutory mandate, the U.S. Fed seeks to foster maximum employment and price stability.

The Fed statement can be viewed here