Fed Stays Course on Rates — and Even Sounds Upbeat(!)

The Federal Reserve Board today maintained its monetary policy, leaving its recommendation for interest rates where they are: at 0% to 0.25%.

Strikingly, the Federal Open Market Committee’s statement about its monetary policy borders on the upbeat:

Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing. Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales.

True, the Fed qualified its statement by saying the economic situation continues to force it to employ “exceptionally low levels of the federal funds rate for an extended period,” and a forgiving monetary policy. But the Fed is already looking to the future, and will “make adjustments” to its asset-purchasing programs. I take that as a good sign.

See the full text of the Fed’s announcement here.