It seemed that the Federal Reserve conforms to the recently reported economic contraction in the first three months of the year, describing economic growth as solid when officials agreed to maintain stable interest rates on Wednesday.
“Allheh Swings in net exports has affected the data, recent indicators suggest that economic activity has continued to expand at a rate sold,” authorities said in a statement published at the end of the two -day meeting of the Federal Open Market, the Fed Committee.
The economy contracted slightly in the first quarter of the year, said the Department of Commerce last week, reducing to an annual rate or 0.3 percent. But that was largely due to an increase in imports, which are subtractions in the calculation of GDP. The underlying growth measures, including final sales to US consumers and business investment, suggested that the economy continued to grow in the period from January to March.
The Fed statement also touches recent strength note in the labor market. At the end of last year and the beginning of this year, there were signs of softness in the demand for labor, with the inempleal rate that occurs and employment numbers have a lower performance than expectations. Approximately two months, however, employment growth has accelerated and exceeded expectations, while the unjustified rate has stabilized at a low level of 4.2 percent.
Fed seemed a warning that the economy faces risks of higher and higher inflation.
“The uncertainty about economic perspectives has increased even more,” authorities said in their statement after the meeting, the first since President Trump imposed increases in sudden tariffs last month. “The Committee is attentive to the risks of both sides of its double mandate and judges that the risks of a higher and higher and higher inflation have increased.”
According to a law approved in the 1970s, the Fed must pursue the stability of prices and the maximum employment, two objectives that are or sin disagree with each other when it comes to monetary policy. The most flexible policy, mainly carried out through interest rate cuts, is considered by promoting employment but risking greater inflation. Most high interest policy – higher interest rates – withdraw inflation, but runs the risk of increasing inemption.
The FED has maintained its constant interest rate target range 4.25 to 4.5 percent this year after the implementation of three cuts at the end of last year.