The condition of the economy and what the Fed will or won’t do are topics of concern for everyone. The Federal Open Market Committee (FOMC) conducts eight meeting every year to review economic conditions and determine what actions are necessary. Consumers, stock market analysts and governments in the U.S. and around the world anxiously anticipated the outcome of the fomc meeting 2016 for April following remarks by Fed chair Janet Yellen in March that the central bank would proceed cautiously this year.
These meetings are always a source of anxiety because the Fed funds rate is a leading indicator of the economy’s direction. The Fed raised rates for the first time in ten years in December and estimated that they would raise them four times in 2016. Typically, if the Fed raises interest rates consumers can expect slower growth. The cost of home mortgages, loans, and other investments go down if the Fed lowers rates.
At the latest meeting the FOMC committee decided to keep rates at current levels. Only one member, Bank President Esther George, voted to raise interest rates. She voted to raise rates to .75%. Financial and economic conditions are fragile, but committee members are optimistic about future economic growth, as well as continued consumer confidence and the ability of businesses to create jobs.
While the FOMC expects rates to remain low, they are concerned about a few key indicators including consumer spending and weak exports. The future of interest rates depends on the economic data. Market analysts do not expect an interest rate hike until December – if they do raise rates it could be by as much as 50%. In the meantime, FOMC members expect inflation to remain within the target goal of 2% and unemployment rates to remain low.
The current economic environment makes this an excellent time for investors. Financial analysts recommend that investors consider investing in commodities. Actions to keep rates low should keep investor anxiety low since they the Fed will do nothing to add to an already uncertain economic atmosphere. When they do decide to raise rates they will do so gradually and perhaps not at all in 2016.