federal reserve

What did the Federal Reserve say, and what does it all mean?

What the Fed said:

Information received since the Federal Open Market Committee met in March indicates that labor market conditions have improved further even as growth in economic activity appears to have slowed.

What the Fed meant:

The U.S. economy is still expanding, but right now it's moving about as fast as a tree-sloth traffic jam.

Sloth | Raúl Barrero photography/Moment/Getty Images

What the Fed said:

Growth in household spending has moderated, although households' real income has risen at a solid rate and consumer sentiment remains high. Since the beginning of the year, the housing sector has improved further but business fixed investment and net exports have been soft.

What the Fed meant:

Consumers are being stingier than before, even though they've got a little more money these days. U.S. businesses also are being stingy, but it's because their overseas customers are broke and aren't buying their stuff.

What the Fed said:

A range of recent indicators, including strong job gains, points to additional strengthening of the labor market.

What the Fed meant:

More jobs = good.

Office worker holding smiley face picture | Robert Daly/OJO Images/Getty Images

What the Fed said:

Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and falling 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.

What the Fed meant:

Our job is to keep inflation below 2% and it's a pretty easy job right now, thanks to cheap oil and imports.


What the Fed said:

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. 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.

What the Fed meant:

We're kind of freaked out that if we raise rates too fast, we'll put the economy back in "auto-fire" mode and all our hard work getting the job market back on track will be wasted. So we're going to take it slow.


What the Fed said:

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. The Committee continues to closely monitor inflation indicators and global economic and financial developments.

What the Fed meant:

This is the part where we reassure people who are paranoid about the nonexistent threat of hyperinflation. It's not a problem now. It may be in the next couple of years. We're on top of it. As they say on Twitter, don't @ us (or audit us, for that matter).

Staring at a TV | Trevor Hunt/E+/Getty Images

What the Fed said:

Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.

What the Fed meant:

We're doing nothing. Don't spend your 0.25% interest all in one place.


What the Fed said:

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 labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only 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.

What the Fed meant:

After backing off our 4-rate-hike plan for 2016 at the last meeting, we're still kinda sorta trying to get everyone ready for a June rate increase, but whether we actually pull the trigger is going to depend on how the labor market looks and if the global economy hits the fan.

Group of fans | Image Source/Getty Images

What the Fed said:

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

What the Fed meant:

We're going to continue doing behind-the-scenes stuff to keep long-term rates down so you can buy a house. You're welcome.


What the Fed said:

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Loretta J. Mester; Jerome H. Powell; Eric Rosengren; and Daniel K. Tarullo. Voting against the action was Esther L. George, who preferred at this meeting to raise the target range for the federal funds rate to 1/2 to 3/4 percent.

What the Fed meant:

Everyone voted to keep rates unchanged except Esther L. George, who wanted to hike interest rates and also won't share her HBO Go password, so we're not exactly on speaking terms right now.

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