The Federal Reserve's latest "FOMC statement" tells us, "Information received since the Federal Open Market Committee met in March indicates that the labor market remains strong and that economic activity rose at a solid rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Growth of household spending and business fixed investment slowed in the first quarter. On a 12-month basis, overall inflation and inflation for items other than food and energy have declined and are running below 2 percent. On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of longer-term inflation expectations are little changed. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent. The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective as the most likely outcomes. In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes. In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. 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 and international developments." During a press conference, Chairman Powell added, "Finally, we made a small technical adjustment in one of our tools for implementing monetary policy--the interest rate on excess reserves, or IOER rate. The change does not reflect any shift in the intended stance of monetary policy. We use the IOER rate to help keep the federal funds rate in our target range. As balance sheet normalization continues, we have expected that the effective federal funds rate would shift up over time relative to the IOER rate. Last year, we twice lowered the IOER rate by 5 basis points relative to the top of the target range after the federal funds rate moved toward the top of the range. These actions helped keep the effective federal funds rate well within the target range. Today we made one more such change. The target range for the federal funds rate is our main indicator of the stance of policy, and it remains unchanged."

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