MBS Live Commentary: Differences Between Previous and Current FOMC Statements

Information received since the Federal Open Market Committee met in NovemberDecember indicates that the labor market has continued to strengthen and that economic activity has been rising at a strongsolid rate. Job gains have been strong, on average, in recent months, and the unemployment rate has remained low. Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier inlast the year. On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent. IndicatorsAlthough market-based measures of inflation compensation have moved lower in recent months, survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. TheIn Committeesupport judgesof thatthese somegoals, furtherthe gradualCommittee increasesdecided into maintain the target range for the federal funds rate willat be2-1/4 consistentto with2-1/2 percent. The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective overas the mediummost termlikely outcomes. TheIn Committeelight judgesof that risks to the economic outlook are roughly balanced, but will continue to monitor global economic and financial developments and assessmuted theirinflation implicationspressures, for the economicCommittee outlook.will Inbe viewpatient ofas realizedit anddetermines expectedwhat laborfuture marketadjustments conditions and inflation, the Committee decided to raise the target range for the federal funds rate tomay 2-1/4be appropriate to 2‑1/2support percentthese outcomes.

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 maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.