As expected, the Federal Reserve Open Market Committee held steady on its Federal funds rate and said that any changes in the rate are contingent upon the growth of the economy. In a statement released on June 18 after FOMC meeting, the Fed said, "To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate. In determining how long to maintain the current 0 to 1/4 percent target range for the federal funds rate, the Committee will assess progress -- both realized and expected -- toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored."

The Fed added, "When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run."

In a press conference following the meeting, Fed Chair Janet Yellen elaborated on the status of the federal funds rate. "If the economy proves to be stronger than anticipated by the Committee, resulting in a more rapid convergence of employment and inflation to the FOMC's objectives, then increases in the federal funds rate target are likely to occur sooner and to be more rapid. Conversely, if economic performance disappoints, resulting in larger and more persistent deviations from the Committee's objectives, then increases in the federal funds rate target are likely to take place later and to be more gradual."

Of the 16 FOMC committee members, 15 expect rates to stay the same throughout 2014 with only 1 projecting an increase, according to the `minutes/accessible materials for the June 18 meeting. Most expect an increase some time in 2015. Specifically, 13 expect a rate increase next year with 3 expecting an increase to 1.00% and 3 estimating an increase to 1.25%. On average, the projected rate increase for 2015 is 1.20%. For 2016, the FOMC members expected the rate to climb to 2.5%, on average. Those numbers are up compared to the March 19, 2014 FOMC meeting when the FOMC members, on average, projected an increase to 1.12% in 2015 and 2.4%, on average, in 2016.

However, Yellen says it all depends on the economy. "There's uncertainty about what the path of interest rates will be because there's uncertainty about the path of the economy," said Yellen. When asked if the expectation is for a rate increase in the first half of 2015, Yellen said, "There is no mechanical formula for what a considerable period of time means. It depends on how the economy progresses and the progress we are making in achieving our objectives. That is the key determinate. There is no mechanical formula," she reiterated. On the subject of low volatility, Yellen said, "There is some evidence of reach-for-yield behavior."

The current federal funds rate has remained at 0-0.25% for more than five years, dating back to December 16, 2008 when it was lowered from 1.00%. The rate had been steadily dropping since June 29, 2006, when it reached a high of 5.25%. Prior to that it had been steadily increasing from June 30, 2004 when it was 1.25%.

Last week, the head of the Bank of England, Mark Carney, said interest rates could rise in the U.K. sooner than expected. In a speech on June 12, Carney said, "It could happen sooner than markets currently expect," according to an article in the Financial Post. On June 5, the Bank of England's Monetary Policy Committee voted to maintain the bank rate at 0.5%. The previous change in Bank Rate was a reduction of 0.5 percentage points to 0.5% in March 2009, according to the BOE.

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