In a Nutshell: “The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity…”

Decision: Fed funds rate target range remains at 1.50% to 1.75%.

The Fed members gathered in Washington and had some food and good discussions, but did very little else. The statement released after the meeting was largely the same as it was in December except for two cases. First, when describing consumer spending, it was called moderate rather than strong. Strong was probably too strong a word to use last time and the current description is more accurate.

The second change is a little more cryptic. In December, as in previous statements, it noted that “the current stance of monetary policy is appropriate to support … inflation near (emphasis added) the Committee’s symmetric 2 percent objective.” In this statement the phrase was: “the current stance of monetary policy is appropriate to support … inflation returning to the Committee’s symmetric 2 percent objective.” That seems to reflect the concern that inflation is not moving upward despite the very low rates. To me, implies that the Committee is willing to err on the side of staying low for too long in order to insure that inflation expectations don’t deteriorate.

The best thing to conclude is that the FOMC is not likely to move for quite a while. It doesn’t see a reason to cut — the economy is growing moderately — while it sees a reason to keep rates low in order to encourage greater demand and higher inflation. Given the recent limited sensitivity of the so-called interest sensitive sectors, housing and capital spending, to rate cuts and low rates, don’t be surprised if the FOMC members sit on their hands all this year.

(The next FOMC meeting is March 17,18 2020.)

Joel L. Naroff is the president and founder of Naroff Economic Advisors, a strategic economic consulting firm.