Yesterday, the Federal Reserve’s Federal Open Market Committee (FOMC) released a statement regarding its view of the present state of the U.S. economy and the likelihood of future changes in the Federal Reserve’s open market activities.

Information received since the FOMC met in March "suggests that economic activity has continued to strengthen and that the labor market is beginning to improve.” Household spending has picked up, but "remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit.” The committee concluded that "the pace of economic recovery is likely to be moderate for a time," with a "a gradual return to higher levels of resource utilization in a context of price stability." Accordingly, the Committee concluded that "inflation is likely to be subdued for some time."

The Committee decided to maintain the federal funds rate "in the target range of 0 to 1/4 percent." As it has done for several months, the Committee stated that it "continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.”

Thomas M. Hoenig was the lone vote against the statement. He “believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to a build-up of future imbalances and increase risks to longer run macroeconomic and financial stability, while limiting the Committee’s flexibility to begin raising rates modestly.”