FOMC, no rate increases. What are the takeaways?

The Federal Open Market Committee (FOMC) met on June 14-15, 2023, and decided to leave the federal funds target rate unchanged at a range of 5.0% to 5.25%. This was the first time since March 2022 that the FOMC had not raised interest rates at a meeting.

The FOMC's decision was based on the assessment that the U.S. economy is slowing down, but that inflation remains elevated. The committee noted that "economic activity expanded at a modest pace in the first quarter," and that "job gains have been robust in recent months and the unemployment rate has remained low." However, the committee also noted that "inflation remains elevated," and that "inflation expectations have begun to rise."

The FOMC's decision to leave rates unchanged was a sign that the committee is taking a more cautious approach to monetary policy. The committee is likely to continue to monitor the economy closely and to adjust interest rates as needed.

Here are some of the key takeaways from the FOMC meeting:

• The FED left the federal funds target rate unchanged at a range of 5.0% to 5.25%.
• The FOMC acknowledged that the U.S. economy is slowing down, but that inflation remains elevated.
• The FED said it will continue monitoring the economy closely and adjusting interest rates as needed. (They hinted at the possibility of two separate 25 BPS increases later this year)
• The FOMC's decision to leave rates unchanged was a sign that the committee is taking a more cautious approach to monetary policy.

Overall, the FOMC's decision to leave rates unchanged was a cautious move that reflects the committee's assessment of the current economic conditions. Also, this could be a result of major economies in the world like the Eurozone, Japan, New Zealand, etc... entering officially a recession with two negative GDP growth quarters. Since the definition of a recession last year the U.S. economy still is considered officially in a recession, but many economists using the old definition would argue that the U.S. has been in a recession for quite some time now.