Fed maintains existing federal funds rate

The Federal Open Market Committee didn’t change the federal funds target rate, leaving it at a range of 1.25% to 1.5%, according to an FOMC statement. The federal funds rate, or the rate banks charge each other for overnight loans, is used to determine the interest rate one would receive on a loan. In December, the Fed increased the rate by 0.25% to the existing range.

Since the FOMC met in December, the labor market has continued to strengthen and economic activity has risen, according to the statement. The unemployment rate has remained low as employment, household spending and business fixed investment have risen. In the past 12 months, overall inflation and inflation for items excluding food and energy has remained less than 2%. Wage inflation has increased recently but remains low, and long-term inflation expectations are little changed.

Inflation is expected to rise this year and reach the Fed’s goal of 2% over the medium term. Risks to the existing economic outlook are balanced as the Fed monitors inflation developments. The Fed expects economic conditions to continue to improve and allow for gradual increases in the federal funds rate.

The FOMC will meet seven more times in 2018, with the next meeting set for March 20-21.