Question

At the conclusion of the FOMC meeting yesterday, the Committee decided to:

A.	maintain the target range for the federal funds rate at 1-1/2 to 1-3/4 percent

B.	maintain the target range for the federal funds rate at 2-1/2 to 2-3/4 percent

C.	increase the target range for the federal funds rate at 1-3/4 to 2 percent

D.	decrease the target range for the federal funds rate at 1-1/4 to 1-1/2 percent

Answer 1

(A) maintain the target range for the federal funds rate at 1-1/2 to 1-3/4 percent

In view of realized and expected labour market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1-1/2 to 1-3/4 percent. The stance of monetary policy remains accommodative, thereby supporting strong labour market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labour market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.