Financial Market Research Brief

Fed maintains wait-and-see approach. The Federal Open Market Committee opted to not adjust the overnight lending rate at its June meeting, marking six months at a 4.25 percent lower bound. This decision indicates that the FOMC has a favorable view of both the current state of the labor market and inflation. The U.S. unemployment rate has held under 4.5 percent — around the level of full employment — for almost four years, while the total job count expanded 7 percent. Meanwhile, the year-over-year pace of headline CPI inflation has stayed in the mid-2 percent zone since March. Consumer activity, as measured by receipts at retailers, is also still climbing. Until these metrics show signs of worsening, the Federal Reserve is unlikely to adjust rates.