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Talking Feds: Same as it Ever Was

Talking Feds: Same as it Ever Was

The Federal Open Market Committee of the Federal Reserve Board has decided after its most recent meeting not to change interest rates from their near-zero levels. The Fed has not raised its federal funds rate since 2006 and has not indicated when the next rate hike will be. Although the Fed will meet again in September, analysts do not agree whether that will bring an increase in rates.

Federal Reserve Chair Janet Yellen has repeated that the Fed’s decision to change rates is dependent on two factors: low unemployment and annual price inflation hitting the 2% mark. Prices at both the consumer and producer level have tended to rise this year, and jobless claims are at the lowest levels in four decades while the unemployment rate in June reached a seven-year low. However, projected growth in the United States economy is still tepid, nowhere near the desired level of 3%. The favorable unemployment claims number masks the fact that over 600,000 left the job market.

One of the most important components of economic growth, the housing sector, has been giving mixed signals lately. Although existing home sales have risen for nine straight months, new home sales in June dropped nearly 7% from May, and home ownership now stands at the lowest level in decades.

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