The Federal Reserve did the expected earlier this afternoon when it voted to keep interest rates unchanged following the conclusion of its latest FOMC meeting.
Although the central bank held the line on rates, as expected, its accompanying statement became moderately more hawkish. To be sure, this was not a game changer, but there was enough of an adjustment to stoke some selling in the equity market in the minutes following the monetary move.
Specifically, the Fed noted that economic activity has been rising at a strong rate. At its last (June) meeting, the Fed had said such improvement had been solid. Also, at the earlier meeting, the bank said that unemployment had declined. Now, the FOMC statement suggested it was remaining low.
Also, household spending was modified from picking up to growing strongly. Finally, overall inflation, which previously had been said to be moving close to the 2% target, was now acknowledged to be remaining near 2%.
All of this would suggest that the Fed was leaning toward another interest rate increase at the mid-September FOMC meeting and perhaps later at the December confab.
- Harvey S. Katz, CFA
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
