FOMC Leaves U.S. Rates Unchanged, But Expresses Concern About Low Inflation

Posted on 05/01/2019 2:03 PM

The Federal Open Market Committee (FOMC) meeting that began Tuesday morning concluded today. As expected, the FOMC did not make any major changes in U.S. monetary policy. The statement said the Fed remains patient on any future monetary policy moves. The U.S. economy continues growing but some FOMC members did express concern about too-low U.S. inflation. The statement leaned dovish due to the inflation concerns.

However, Fed Chairman Jerome Powell at his press conference after the FOMC meeting somewhat alleviated trader concerns regarding low inflation when he said the present low level could be due to "transitory" factors. Powell's comment may have pushed the U.S. dollar index higher and taken some of the dovish tone out of the initial reading of the FOMC statement by traders. Markets showed no major reactions to today's FOMC news.

Meantime, this morning's ADP national employment report for April showed a rise of 275,000 U.S. jobs, which was way above the forecast for a rise of 177,000. This report is a precursor to the more important employment situation report from the Labor Department on Friday morning, and suggests Friday's jobs report could be stronger than many had expected.

A strong employment report on Friday could alter the thinking of the Federal Reserve, regarding its present monetary policy that still leans dovish.

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