If all you did this week was read the statement, you might be very confused about what the Fed is up to. Which is why you should check out the numbers, too.
The statement notes that the Federal Open Market Committee voted, once again, to leave interest rates unchanged at just above zero. But it also says three voting members dissented, in favor of raising rates immediately, and it suggests the committee as a whole sees the economy as increasingly primed for a rate hike. "The labor market has continued to strengthen," the statement says, "and growth of economic activity has picked up." These are the words of a committee preparing to move.
The accompanying projections explain why the committee did not move this month. They show committee members still expect the inflation rate to end the year at 1.3 percent, well below their target of 2 percent. Core inflation, which excludes volatile prices such as energy, is forecast to end the year at 1.7 percent. Economic growth, meanwhile, is expected to remain a far-from-roaring 1.8 percent for the year.
That all adds up to an economy that could still stand more growth and appears at no immediate risk of an inflation surge. Committee members make their projections assuming monetary policymakers won't make any mistakes. So they're judging, essentially, very little chance of high inflation even at the current path of wait-for-it, wait-for-it rate hikes.
Yellen called that a "cautious approach" in her news conference after the meeting.
“The economy," she said, "has a little more room to run than might have been previously thought.” It's the monetary-policy equivalent of, Things are going well. Let's stay on course a bit longer. Or at least, until the numbers more strongly suggest it's time to change.