Washington, DC, August 10-- The Fed raised short-term interest rates by a quarter percentage point, the second such increase this summer, asserting that the U.S. economic recovery remains intact despite recent "softness."
The central bank's unanimous decision today, which was widely expected, brings the target for the federal-funds rate to 1.5% and comes despite recent data that suggest the economy has cooled.
Nearly everything in the statement accompanying the decision was the same as in the June statement but the Fed was more specific in blaming the slowness on energy, as opposed to "transitory factors" in the last statement.
"In recent months, output growth has moderated and the pace of improvement in labor-market conditions has slowed," the Federal Open Market Committee said in its statement. "This softness likely owes importantly to the substantial rise in energy prices."
The economy "appears poised to resume a stronger pace of expansion going forward," the Fed said. Policy makers described inflation as "somewhat elevated," although they again attributed some of that to "transitory factors."
The committee gave no indication it intends to slow the interest-rate campaign anytime soon. "With underlying inflation still expected to be relatively low, the committee believes that policy accommodation can be removed at a pace that is likely to be measured," the FOMC said.
