The Federal Reserve announced it had decided against raising its benchmark interest rate following central bankers’ two-day summit recently in Washington.
Citing the fact that economic progress had “slowed” at the start of 2017 and that household spending “rose only modestly,” the Federal Open Market Committee (FOMC) declared in a statement that it would “maintain” nationwide interest rates for the moment.
“The committee views the slowing in growth during the first quarter as likely to be transitory and continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will stabilize around 2% over the medium term,” according to the statement .
The decision was largely anticipated following the FOMC’s third meeting of this year, with the Fed having already increased rates in March. “The outcome of the meeting is not a surprise. However, the Fed should continue raising rates at a modestly faster pace than previous years – two to three rate hikes total this year,” Jason Pride, Director of Investment Strategy at Glenmede, commented.
Fed officials seemed willing to overlook the 2017 Q1 relaxed growth rate, under the presumptions that economic growth is likely to increase in the coming months and that slack consumer spending is likely to turn around in Q2 and beyond for the U.S.
The economy’s paltry 0.7% growth rate in the first three months of 2017, and the domestic payroll additions of a bleak 98,000 new positions in March – signs that pointed to the Fed aiming to remain on course regarding monetary policy rather than downgrade its economic forecasts – were positive indications for expert analysts.
In its statement, the Fed seemed to disregard March’s weak employment report as a one-time slump, remarking that job gains have been “solid, on average, in recent months” and that the unemployment rate had “declined.”
“The fundamentals underpinning the continued growth of consumption remained solid,” the committee statement disclosed, also noting that business fixed investment “firmed” and that inflation metrics have “been running close to the committee’s 2% longer-run objective.”
A scant 35% of Millennial first-time home buyers believe 2017 will be a better year to buy than last year, adding to the number of home seekers who will likely delay or forego home purchasing this year.
Nonetheless, the basic beliefs of homeownership remain largely valuable to survey respondents. “It’s natural for home buyers to be anxious,” said Joe Melendez, CEO of ValueInsured. “As prices rise, home buyers [must seek] ways to protect themselves,” he added.