Comparing US Fed’s views on economy, inflation

Jeffrey Berger

A comparison of the Federal Reserve’s statements from its two-day meeting that ended Wednesday and its meeting on June 18-19:

ECONOMY:

June: “Economic activity has been expanding at a moderate pace. … The (Fed) expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline.”

July: The Fed downgrades its view of economic growth from “moderate” to “modest,” but expects improvement later this year: “Economic activity expanded at a modest pace during the first half of the year. … The (Fed) expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline.”

INFLATION:

Then: The Fed “also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.”

Now: Fed officials expressed more concern about inflation, which has slowed: The Fed “recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term.”

HOUSING:

Then: “The housing sector has strengthened further.”

Now: “The housing sector has been strengthening, but mortgage rates have risen somewhat.”

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