The Fed maintained their current policy, offering the following assessment of the economy in their announcement:
Information received since the Federal Open Market Committee met in January suggests that economic activity has been expanding at a moderate pace despite the global economic and financial developments of recent months. Household spending has been increasing at a moderate rate, and the housing sector has improved further; however, business fixed investment and net exports have been soft. A range of recent indicators, including strong job gains, points to additional strengthening of the labor market. Inflation picked up in recent months; however, it continued to run below the Committee’s 2 percent longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.
Let’s look at the data, as provided by the Richmond Fed:
There were two sources of growth in 2015: PCEs and residential investment.In contrast, business investment and exports provided drags on growth. Overall, 2015 experienced two quarters of weak growth: .6% in the 1Q and 1% in the fourth.The US economy is grinding forward. But the sum total of all the weakness is starting to mount.
Regarding future developments, they noted:
The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will continue to strengthen. However, global economic and financial developments continue to pose risks. Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of declines in energy and import prices dissipate and the labor market strengthens further.
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