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At the FOMC meeting that concluded today we maintained our policy interest rate but made some significant changes to our statement. Since the beginning of the year we have judged that our current policy stance was broadly appropriate, and that we should be patient in assessing the need for any changes. In light of increased uncertainties and muted inflation pressures, we now emphasise that the committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion with a strong labour market and inflation near its 2 per cent objective.
So far this year the economy has performed reasonably well with solid fundamentals supporting continued growth and strong employment. Inflation has been running somewhat below our objective, but we've expected it to pick up supported by solid growth and a strong job market. Along with this favourable picture we've been mindful of some ongoing crosscurrents, including trade developments and concerns about global growth.
So why not now? And I would say there was not much support for cutting rates now, at this meeting. As you see, a number of people wrote down rate cuts, but all of those, but apparently, one felt that it would be better to see more before moving. And I gave a couple of reasons why that is the case.
First, it's just the fact that some of these developments are so recent that we want to see whether they'll sustain. So we felt that it would be better to get a clearer picture of things and that we would, in fact, learn a lot about these developments in the near term. Ultimately, the question we're going to be asking ourselves is, are these risks going to be continuing to weigh on the outlook? And we will act as needed, including promptly if that's appropriate, and use our tools to sustain the expansion.
