The Fed plans to raise rates 'fairly soon' if the economy cooperates
Illustration of Uncertainty in the Summary of Economic Projections
The SOMA manager reported on developments in U.S. and global financial markets during the period since the Committee met on December 13-14, 2016. Financial asset prices were little changed since the December meeting. Market participants continued to report substantial uncertainty about potential changes in fiscal, regulatory, and other government policies. Nonetheless, measures of implied volatility of various asset prices remained low. Emerging market currencies were generally resilient in recent weeks, reportedly benefiting from investors' anticipation of stronger global economic growth, after depreciating significantly against the dollar during the previous intermeeting period. Market expectations for the path of the federal funds rate were little changed over the intermeeting period.
Staff Review of the Economic Situation
Staff Review of the Financial Situation
Staff Economic Outlook
In their discussion of the economic situation and the outlook, meeting participants agreed that information received over the intermeeting period indicated that the labor market had continued to strengthen and that economic activity had continued to expand at a moderate pace. Job gains had remained solid, and the unemployment rate had stayed near its recent low. Household spending had continued to rise moderately, while business fixed investment had remained soft. Measures of consumer and business sentiment had improved of late. Inflation had increased in recent quarters but was still below the Committee's 2 percent longer-run objective. Market-based measures of inflation compensation remained low; most survey-based measures of inflation compensation were little changed on balance.
Committee Policy Action
By notation vote completed on January 3, 2017, the Committee unanimously approved the minutes of the Committee meeting held on December 13-14, 2016.