The Committee did not consider it appropriate to reduce the target range until it had gained greater confidence that inflation was moving sustainably towards 2%.
This afternoon the United States Federal Reserve decided to maintain the interest rate, in support of its objectives, in the target range for the federal funds rate between 5.25% and 5-50%.
In its statement, the entity states that recent indicators suggest that economic activity has continued to expand at a solid pace.
"Employment growth has remained strong and the unemployment rate has remained low. Inflation has declined over the past year, but remains elevated. In recent months, there has been a lack of further progress toward the inflation target of 2% of the Committee", indicates the entity in its statement.
The Committee seeks to achieve maximum employment and inflation at a rate of 2% in the long term. The Committee believes that the risks to achieving its employment and inflation objectives have moved towards a better balance over the past year. The economic outlook is uncertain and the Committee remains very attentive to inflation risks.
"In considering any adjustment to the target range for the federal funds rate, the Committee will carefully evaluate incoming data, the evolving outlook, and the balance of risks. The Committee does not expect that it will be appropriate to reduce the target range until it has acquired greater confidence that inflation is moving sustainably towards 2%," the entity states in its statement.
Additionally, the Committee will continue to reduce its holdings of Treasury securities and agency debt and agency mortgage-backed securities.
Starting in June, the Committee will slow the pace of decline in its securities holdings by reducing the monthly redemption limit for Treasury securities from $60 billion to $25 billion.
The Committee will maintain the monthly repayment limit on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this limit in Treasury securities.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook.
Although there has been speculation for months that rates could only be lowered in September of this year, the Committee stressed that it would be prepared to adjust the monetary policy stance as appropriate if risks arise that could impede the achievement of the Committee's objectives.
"The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments," the statement said.
The question remains whether the Committee believes the conditions are met.
Powell said that it depends on all the information available, "putting together the inflation and unemployment data. If we gain confidence that inflation moves to 2% or there is unemployment, those are paths where we could be seen lowering rates (...) we have to look at the whole story," Jerome Powell said at the press conference.
