The Federal Reserve boosted its assessment of the economy and downplayed low inflation while repeating a pledge to stay “patient” on raising interest rates.
The Federal Open Market Committee (FOMC) described the expansion as “solid”, an improvement over the “moderate” performance it saw in December. It substituted “strong” for “solid” in its evaluation of job gains after yesterday’s meeting in Washington.
While inflation “is anticipated to decline further in the near term”, the FOMC said, it was likely to rise gradually towards its 2 percent goal “over the medium term” as the impact of low oil prices diminished.
Policymakers also said cheaper energy would help boost consumer buying power.
The Fed’s confidence in the outlook for higher inflation and lower unemployment suggests it will stick to plans to raise interest rates this year for the first time since 2006. One caveat: officials will take “international developments” into account when considering an increase, language that contributed to a decline in stocks and Treasury yields. – Bloomberg